 testing one two testing one two test testing one two testing one two I want to make sure everyone can hear me we're going in a second here testing one two testing one two everyone hear me all right well welcome everybody today as the last part of our series on achieving peak performance and we're going to get into position management hold on one second here here we go no one to retreat before I get started want to go through the disclosure so this is all for educational purposes here to provide you some insight how to be trade better so nothing that we are saying here is meant to be any specific investment advice and the one thing that we can say is that you know definitely if you're trading you want to use capital that you can risk helps you make better decisions there is substantial risk in trading and you want to make sure that it's all discretionary income so Dharma capital is a firm I started it's Dharma capital trading Dharma capital is a investment fund I started with my brother and Andrew keys and Dharma capital trading is an offshoot of my analytics business JS services which has been supporting professional traders for over 35 years and so you know we look to create a positive impact to help traders achieve their full potential and we do this by empowering traders with fact-based solutions that enhance self-awareness and our approach enables traders to execute trades confidently and effectively by facilitating the state of flow so providing you with facts so you you can get in and out of the state of flow when you're just in tune with with what the markets doing and everything is in sync you're able to do that when you have the right fact foundation and when you have doubt or you're dealing with too many things that are subjective that's what keeps you out of a state of flow because you can't you don't have the clarity so when you have good facts you have better clarity and you can really perform so in the trader development side we've gone through knowing yourself who are you and how does that influence your trading knowing your enemy who are you trading against you know basically we're trading against big funds and we're trading against the high frequency traders so all the algos that are market makers are in there and everyone's out there to take your money so how do we how do we compete well we need to understand what the battlefield is what's the context of the state that we're trading in and from understanding that context we can define the optimal strategy and the best optimal tactic to execute that strategy and then we can use the order book for our timing of when to strike and then we need to we're going to go over position management and when we need to retreat or we need to take our money and protect it and so that's what we're going to get into today knowing the risk and so you know we've got a couple different things here you know money management and trading is really your balance between what you're risking and what you're looking to make so whenever you're putting capital at risk you need to understand is it worth it and so I always like to look for the biggest opportunities with the least amount of risk and always look search out those opportunities to put yourself in those positions because you know if you if you're getting into situations that are risk one to make three risk one to make five risk one to make ten you know if I'm if I'm in risk one to make ten situations I can be wrong most of the time and I can still benefit from that and I you know as long as I'm able to let that trade play out for me which is which is important you can't get into something with a with a good risk-reward ratio but then don't let yourself capitalize on it so it's it's always important to know risk first and then make sure it's worth it if it's not worth it there's no then just wait for the opportunity and then defensive money management and this is you know really the key to having a sustainable trading career you know you know focus on the facts focus on the risk play defense and the profits will take care of themselves put yourself in that sweet spot and just and be consistent with your risk management and so some defensive you know types of risk you know obviously market price you know so if we're talking about crypto markets you know a good general you know event crisis percent is 35% for one day events in crypto that's pretty much been the the extremes kind of stayed within that for you know one day moves so just understanding hey you know what is that event move that's you know anyone that's been involved in crypto for any time you know you kind of look at zero as your risk but you know it really comes down to how you're you know what kind of margin you're using what kind of leverage and then we're gonna do that a little later you know the understanding that your machine can go down having backup you know these are just all basic things that you need to take care of before you start getting into it you know if you know how do you manage your position you know typically if you're putting an order on the exchange or an order into your order management system it's gonna be there but then what if you need to adjust it and with you know 24-7 trading you need to have backup how do you get that done so you need to have plan for that you need to understand what economic events are coming out you know what what news has a potential to influence the market and you know unfortunately you know everything is very you know event driven and in crypto you can have these you know big sweeps that just you know they're searching for stops they sweep and then immediately they're back back in alignment and you know if you were off the market during one of those events you're stopped out and you're not back in and so understanding when those events are occurring plan for it de leverage do what you need to do but know that there's a potential for risk there and with you know especially on crypto you've got different exchanges and they have different maintenance periods and so you don't want to be in a situation where you've got a maintenance period coming up that you're not aware of and you're you're leveraged pretty high and all of a sudden the exchange is down for 15 minutes and sometimes that can turn into 30 minutes and I've seen that turn into three days so you need to you need to be on top of you know the exchange health to make sure that you're not stuck in the situation like that you know we they're structuring your risk you know your risk related to you know how much capital do you have available to trade you know and that and really just setting some defined benchmarks there and guidelines so you're not going to blow through all your capital and you need to define your risk by what capital you have to risk and do that you need to you know consider your account balance and then also you know what unrealized gains do you have so as you're putting on your positions you know if you do have someone unrealized gains on a trade and you want to add to that position you know having a good understanding of what that additional leverage is going to do to those unrealized gains because any kind of pullback you're going to you're going to lose on the new size and then you're going to give back on your other side so you it's going to leverage it so you need to be careful with not getting too top heavy on a trade where you've got a good lead on some small size and you come in and try to press it with big size so on position sizing you know it's it's good to have you know really objective rules you know you and you know when you go through and I've the very first stage of self-awareness and understanding you know why you trading what you're looking to make and you have these numbers of what you want goals of what you want to attain and you kind of work backwards from there about you know I want to make this much a month or this much a year and you kind of go back and that turns out to this much a day and this much a trade and you just have you know you have and then based on what you're looking to make you know what what do I need a risk to do that and it needs to be you know a favorable risk reward so you're not having to take on some kind of unmanageable risk to achieve your goals and everything on position size is you don't want to have subjective influence so you can't just wake up one day and say I feel good I'm gonna get that big you need to remove as much subjectivity to your position sizing and so I recommend standardizing your position sizing and I like to use a 1 to 3 unit kind of benchmark where you know a one unit you know whatever your unit sizes is it is it a one lot is it a 10 lot is it 100 lot whatever that one unit size is you know what your max is so if I'm if I'm trading one lot my max size is a three lot but my unit size is a one lot and so if I'm coming in and identifying an opportunity and it's a it's not an optimal opportunity but it's a trade I'm looking to take you know I trade I'm trading one unit if I if all the stars align and it's it's the best in the it's it's my favorite tactic is in alignment with the market state it's at a major structure point and the order book is moving in my favor and it's a three unit trade you know so I'm gonna bet bigger because things are in my favor you know but it's all if then you know if the market is in alignment then I'm trading this many units if it's not an alignment then I'm trading that many units but it's not a subjective thing it's something objective and that's something to standardize and it makes things a lot easier and you need to stick to those guidelines you know with the goal of just removing that emotion you know the the the biggest drawdown comes from you know emotional decisions you know avoiding high-risk trading trading driven by emotions this is a key key function and you have to interject things into your decision-making process that you know remove these emotions and and standardize and make things more objective you know so when you do get emotions anger you channel into healthy ones you know do some push-ups you know or some setups or you know just get you know get some you know little exercises always a good way to to work some anger out so you're not taking it out on the market and and always you know when you feel those emotions welling up and getting frustrated you know go back and focus on the facts you know what are the probabilities you know that's that's your basis for your decision-making you know what is more likely to occur you know go always go back to the fact foundation because that's that's going to give you the insight to the truth and by understanding the truth it's going to you know deescalate any emotions that you're having I like this quote you know I'd like to draw from these Eastern philosophers and you know Sun Tzu Art of War victorious winners victorious warriors win first and then go to war well defeated warriors go to war first and then seek to win so have a plan you know before you're getting involved in the market before you're putting capital or risk what's the plan what's the risk what's the reward don't just jump in and say okay I'm in the trade right now you know what you know when am I going to get out of this thing you know what you know where should I we're should I try to make some money you know and just be kind of an emotional wreck just trying to deal with volatility in the marketplace and every bit an offer versus going in there with a plan waiting for the market to come into alignment executing your tactics and and trading the trade out don't let don't let the emotions get you in and out but have a plan first and that's how you succeed for some tools you can use you know definitely you know obviously you know stop loss orders you know to limit your losses and you know definitely you know I mentioned earlier these stop sweeps and this happens a lot so you know if you're gonna use a stop you know I'd spread it you know so spread those stop orders out start getting out sooner than later everyone's gonna you know you don't want to get in in the flush you know that's when you're gonna get a lot of slippage so you know part of your party of trade just gonna be done money management and protecting what you have so definitely starting to deleverage and then using stops to get out but being aware that you may get you know there are a lot of situations where you just take it these flushes and especially on within markets and in on the exchange you could you may get stopped out and sometimes you need to get right back in so I like the using spread spreading those stop loss orders around and starting sooner than later especially when you're talking about taking profits you know and that's the other thing you know you use rusting limit orders to secure your gains so you get these really fast profit surges in crypto and if you don't have a rusting order in there you're gonna miss it so again that's another one to kind of spread in and out of you know go if you have a target you know definitely you want to start getting out of something in front of it you know and when nice thing about crypto is when you have your unit size you can really you can break that into such smaller chunks and so in even psychologically to have sold a micro part of your position through a limit order is helpful makes it easier to deal with managing that trade so you having some rusting limit orders to secure your gains and then aggressively using trail stops to reduce your profit give back so and this is where having a plan is important where you know you have a target area and or the market makes a new high and this happens or new low them happens all the time in crypto and immediately turns around so when the market does break out of a structure point having a plan of what how am I going to reduce my profit give back the market's giving me money and we've seen it so many times where it comes up makes a new high and they just just really has a really strong reversal from that and so having a plan that okay if it if this if the market does this then I'm gonna adjust my my my profit trail stop to here and and that's and again that's a good thing to have as a spread as well so spreading in spreading out but when it comes to reducing your profit give back and trail stops you know you're not thinking of a break even you were thinking of making money so if if you're if you when you're putting a trail stop on to reduce your profit give back you want to you know definitely want to start doing that sooner than later to lock in more gains and then that also depends on the differential between where is your limit order you know how much is left in that trade that you're anticipating to exit versus you know as the trade just getting started so the closer you get to your target the more aggressive you want to be with locking in your gains you don't want to be in a situation where you're backwards where you're risking more than what you're looking to the additional profit that you're looking to make so there's other tools options so options are great great tools to use to when you're have a position you're looking for bigger moves you know you have a position on you can hedge you can you know if you if you're along the market you can you can own some puts to hedge a long position you could be a put spread this is you know it's a great strategy to put on for overnight trading or just have a foundation so you especially if you're doing a put spread you could you know you can pretty much pay for that insurance and and it gives you some kind of you know back you know it's not going to be complete coverage but it's going to give you a little piece of mind as well for some potential event move obviously if you're selling if you're buying puts and selling puts you know your short puts are going to be something to deal with but if do if you it's and that's just something you need to manage but you have you know depending on how you structure your trade if you if you are gonna you want to pay for those puts with short puts then you just need to manage your strikes so that it makes sense to you know what you're trying to hedge you know or you're just putting on some options for overnight position just to protect your your your long position and you're willing to give up the time to give for the overnight but it's a it's a great tool to to use and the other way to do is is managing your risk and you can limit your potential losses by defining your maximum risk so I can put it kind of a floor use a put strategy to set a floor for my potential losses so I could I could buy some out-of-the-money puts which would be cheaper and I know that you know that's my floor for my risk and that gives you just some peace of mind for some if there's a potential event I like the strategy of protecting unrealized gains without having to sell the assets so if I'm I'm long and the market's coming into my target area and I'm expecting at least a pause it might extend but I'm spending you know at least a pause we could reject you know I can buy I can come out and I can buy puts there which is a little you know which is a little aggressive but I can also sell the calls so I can you know I can come in and sell the out-of-the-money calls against my structure point and that's gonna if the market does go sideways or reject and go lower I'm gonna pick up that time decay and if it goes higher I'm still gonna you know basically whatever that premium was I'm still I'm gonna get still get that premium and then obviously if you move the market moves beyond that I'm gonna be giving up that opportunity but I own the asset and then adding the puts to it to create a collar is a little a little more aggressive but then if the market has had a huge profit surge and it's coming into a great structure point it's a it's a way to maintain your long position if the thing you know does turn into a an upside rip but you then if but if you stall and you turn from there and you get this corrective move you've got the puts and then you can cover those puts and you still have your your short you could kind of even keep your short calls on if you want to and let that decay so this is it's a great strategy to play around with you you don't have to get out of them you don't have to get out of your trade and a lot of times you can really set yourself up with especially on selling those calls with some decent premium and then and then you can you know you manage that with you can you can after after you get enough time to get you can kind of pull out of that trade and just and you just you're back long again so it's a it's a nice tool to to have in your quiver here's where subjective it you know subjective technical analysis it can come in to play I really don't try to remove as much subjectivity as I can but there are some things that you can do to optimize your stop placement placement optimize your your stop adjustment your trail stops you know optimize your your exits you can use the order book for timing for those adjustments and you know using the microstructure of the order book to you know to make it additional adjustments so these are all additional tools that we can use to position and manage our risk and we'll take a look at some examples in a little bit after we get through the end of the presentation diversification you know for day traders or swing traders it is nice to have a correlated asset to spread against or to trade against you know so if you're trading I trade Bitcoin and ether yes there's always a playoff between that spread it's a good spread to trade as well you know and so you can if you my mandate is I want to be a buyer and then it's just you know which one potentially you know is going to go up faster or down faster you know so so it's it's nice to have a correlated asset to look for confluence and then you know also have a somewhat some kind of balance you know being long you know more of one than the other and you know potentially even in putting a spread on as well especially when you know the the market starts to turn other thing is to incorporate different timeframes in how you look at the market so you've got you know your short-term opportunities in your longer-term opportunities so you kind of diversify there between you know having a smaller position on for your longer-term opportunities and you're using more leverage for your shorter term opportunities and not throwing everything at one trade you know just you know getting into some token that's going to be the be all and end all and putting everything into it and thing just drops when the rest of the market takes off you know then you know that's just you know that's different difficult to handle on so many levels so you want to you know always be measured and keep your size management you know as objective as possible and that should just be a function of your your account size and how much you want to allocate to a specific trade so I've gone through you know a lot of different features on position and size management this is the real art form of trading you know this is where it's all about you know you have you know when we understand the market states in the context and we understand the structure of that state in context we can really identify where we want to get involved it's just you know when do when we get involved in how we manage that position is is really what sets things apart and so we're going to take a look at some live market action and and we'll look for some we'll see how we can incorporate some of this these analytics here to an opportunity so we're looking at Bitcoin right now just pull up so this is a market outlook that we do every day and so today is Tuesday the 9th and we're looking what you're looking at here is the weekly structure so this is the weekly price map structure and this is the previous week's low previous week's high here's the opening range for the week so the opening range is based off the first day of the week for crypto and that's Sunday so that's our opening range and the market moved out of the opening range and which also turns out to be our directional level which is our sentiment bias as well and so it had a really decisive move out of there you know once it broke through opening range which is also the metric boundary of our directional pivot it gave us a cell signal in the market followed through and to what we call a full APMD profit target and so on our outlook for the if we're looking at this is a trade and how we're going to position management in the market is threatening further losses below 2800 so that's here targeting 2700 so the expectation is that the market is going to trade below this level it's going to continue to deteriorate and make a play for 2700 and so this just adjust adjust this chart so Bitcoin really hasn't done anything but let's just assume that we are in a short position so assuming that we are in a trade from here market is started to come into our target area what can we do to position manager's trade so we know that fact is as long as the market is below the previous week's low that's a that's a indication that of weakness and that we could see further losses we also know that 2800 is a pivotal point to the upside so we know that we're going to want to exit this trade if the market starts to trade above here we can use price structure to identify you know you know peaks we have a metric boundary so definitely if the market is trading back above here this negative momentum is broken and at the moment the market is tied between 2800 and this 2700 so is that all we're looking for on this trade let's go back to the forecast this forecast is saying that this market could easily drop down to 2600 so we have a little more juice into our trade so let's shrink this a little bit so let's use these as our risk reward parameters I figure a way to get those to stick so I'm going to put the daily structure on here so this is our directional I'm looking at the order book here and I've got the market you know the sellers are definitely defending this area so the market's under pressure below here so I know 2800 is from the forecast this is actually even shifted lower and we've got as long as we're below this previous week's low this market's negative so that's coming in here around 27700 so basically right in this area here so right now we're fine we're comfortable with this this short position we're going to look to take some money off the table here so for the money that I'm going to take off the table here it's a 27200 and the markets trading at 27600 basically so I'm looking for 400 $400 break I don't really want to risk too much more than 100 150 bucks on that so basically is them if you know this peak here is going to be where I'm going to want to put some stops to exit as well as above here and if the market starts to base above the previous week low I may start anticipating to get out of more of that trade so exit everything above this structure exit half above this structure and I can exit start exiting a quarter above here as the market moves lower I'm not going to adjust my out of everything until the market really moves down to here but as it does then I'm as mark if the market continues to move lower as it moves below this area I'm going to be more aggressive adjusting here what I can do as well since I am short the market if I'm looking for to hold on to this position overnight we could investigate buying the 28,000 calls and selling the 29,000 calls conversely if the market does break really hard as it's coming into this area depending on what the there are longer-term expectations are we could sell the 2600 puts so if we don't have that structure move all that and we're just using this opening range so here's a tactic so this is a 200% opening range move so the market attained that so really as long as the market is staying below 27,700 it's vulnerable and if it starts to shift above here and if we're just looking at price structure you know we have this peak and we have that peak so that's our price structure markets so if we use this we have to assume that a lot of people are potentially gonna have stops here and if we see the order book start to build up here and shift it and build a base above 2700 that's going to be a trigger that might want to start lightening up and if we are looking for the market to come down down to these levels potentially if the market starts to base here and move we can then reestablish our whatever we took off here back under 27,600 so that's how we can you know using the order book and what's happening in the moment and really kind of zeroing in on this this aspect here when the fact that the market took out this low here it really shouldn't trade back above here it should we the selling pressure to start to mount and we should start to see this thing shift and we should see some start to see some order imbalance where the the buyers start to thin out here and this starts to get a little dark and then we start to see more liquidity happening lower so with our price map structure it's in alignment with with that the previous weekly low is just you know that is below this area so this whole zone here is really defined in this negative momentum and so absolutely you know this market is vulnerable at the current stage and if it starts trading above here we don't want to have it and as the market moves into these areas we need to have a plan to get more aggressive on our stop adjustment and so we can use this structure to you know move these this stops down if the market makes a new low here and so that that's really what you're looking for in this position management is you know when should things continue well if the market starts to make new lows here it should continue lower and so that's when we want it you know start to make our adjustments and lock in what we have and as the markets approaching this area if we're looking expecting potential stabilization here that's when we can get a little more aggressive or we could look for to incorporate some the option strategies to sell some either we're buying some calls selling some puts and maintaining that short position and that really just depends on you know the duration of your trade and your opportunity of what you're looking for and what time of the day it is the nice thing about having structure is it gives you some ejectivity so you have this benchmark that you can look to and it's all statistical and quantitative and you and it becomes a nice overlay and then the more you understand that structure it helps with your size management too because it helps to identify those areas of value and so that's that's something that we offer in book map with our cloud notes so if you're interested in doing that you can come to our website and register with us and sign up at dharma capital dot trade and the other tools that I've shown you you know if you are trading Bitcoin or Ether we have a market outlook that you can access through our virtual trade floor and also if you're trading the gamut of crypto we have our playbook that will break down the state structure and strategy which we've gone over again keeping you know tool objective fact-based tools to keep your remove your subjectivity and and helping you standardize your position management standardize your risk management where are the structure points and based on what you have to risk you know that in what's what's the opportunity you know that just tells you how much you want to bet and if you want to even trade at all and it also if you do wait for the alignment and it does give you that great opportunity in the moment sometimes you might be shy but if it's if it's a big bet situation you know you really need to kind of stick to betting bigger when the markets in your favor even though sometimes it's the emotions of the market at the moment will be fearful you kind of you know having a fact-based trading solution is going to help you fight through that fear and and use the correct position size and I've been ending the presentations with promoting Daniel comments thinking fast and slow book you know really it's validates you know having a statistical outside view to you know really gives you a better clarity and more accurate prediction than what your subjective inside view has you know we all have these biases that we carry around with us and and what happens is a lot you know when you really get into a state of flow a lot of times your bias is an alignment with the context of the market and and when it's not then it's hard to get into sync and so if you understand what those biases are and you can remove them it makes it easier to kind of get into that state of flow and to you know trading with the market and then when you standardize your method with objective facts especially on your position sizing and your leverage you know you're always betting bigger when the markets in your favor and you're betting smaller when it's not and which is you know which is what it's all about you know position management is the you know the key to successful trading and the biggest thing is having a plan having a plan before you get into an opportunity understanding your risk know what your reward is know what that dynamic is as the markets approaching your targets and making those adjustments having a plan to make those adjustments you know so that way if the market gives you a big profit surge you're not getting all excited and saying oh I'm gonna go for more what if this what if I added this and did this now you already have a plan and the plan is is to protect that product and the profits that you have made so the best way to experience this is to you know get involved with the tools that we have play around with them you see it in real time that's what really is going to make a difference just kind of jumping into it kind of that mock example doesn't really show the power of what you can do and how you can use these tools but so I invite you to come in and play around with them and really see the difference between having that you know a statistical outside view and having that benchmark as a barometer to your trading decisions it makes all the difference in the world and as you come in and you play around with our tools you know I'm inviting you to come to our virtual trade room and where you can you know ask questions in real timing and and go over specific examples so again any questions please feel free to email me directly at js.dermacapital.trade and I look forward to working with you