 Alright welcome everybody. Today we're going to go over the trade decision matrix process using fact-based trading solutions. Before I get into it I just want to go through a disclosure that all information that we present is for educational purposes only and should only be considered specific investment advice or recommendations. Risk disclosure, cryptocurrencies, futures options for it since stock trading contains substantial risk and not for every investor. An investor could potentially lose all or more of that initial investment. Risk capital is money that can be lost without jeopardizing one's financial security or lifestyle. And only risk capital should be used for trading and only those with sufficient risk capital should be considered trading. Past performance is not necessarily indicative of future results. Hello I'm John Slazas from Dharma Capital Trading. Trading for over 35 years started out in futures markets in Chicago. You can learn more about us at DharmaCapital.Trade. This is the proprietary trading and research not the fund. You could also follow me on X. Check out our YouTube channel and we have we're publishing on Substack. And our mission is to create a positive impact and help traders achieve their full potential. And what we do is we empower traders with fact-based trading solutions that enhance self-awareness and decision-making. Our approach enables traders to execute confidently and effectively by facilitating a state of flow. So by providing a fact-based solution helps you to get in that state of flow versus you know having not having a fact foundation it makes it more difficult because things are especially when you have more subjective things. And that's what we're all about. Fact-based trading involves making decisions based on objective data and analysis to reduce speculation and subjective biases. And that's really what it's all about. You really need to cut through all those cognitive biases to trade in flow and really get into it and to do that and use good facts. So today I'm going to talk about the trade decision matrix and how we look at the market. You know we're going to go over the components of that matrix the process and then we're going to get into some practical application with the current market. So the decision matrix. So here's our four-step process. You know the first thing we do is we want to identify the context. So what's the environment? You know really get a solid foundation of what that environment is. You know a lot of people have different ways to go about that. We're going to show you what we do and we're going to use our application to show you how simple it is when you use our application to do that. Next we are going to identify real-time facts. You know what's happening real-time in relationship to that truth that context and based on you know the real-time facts we'll define our opportunity and then we're going to use the microstructure to execute our tactics. So I'm going to flip back and forth from the market to this presentation and you know we'll continue through it you know kind of flipping back and forth. So the step one you know identify the context you know understanding what the state is and its characteristics know the structure and its bias and then you know based on that state and structure you know what are the optimal things to do what are the optimal strategies. So when people define state you know you know I think you know a lot of traders do they'll go and they're going to use technical analysis to define state. We use quantitative analysis but I'm going to kind of you know just provide an overview of you know factual things that can be helpful when you're looking at charts instead of you know subjective tools like like trend lines are subjective tools. You know what the high is is a fact you know moving averages are more factual. So what I have here you know you know something to give you some guidance to you know defining you know a state or condition you know if you don't have our application you know I what you're looking at here is some moving averages I'm looking at you know basically a two-week moving average a one month you know so I've got my 14 day I've got a for my two weeks I've got 30 day for my monthly I've got a 90 day for my quarter and I've got a yearly and this is just how I look at the market and I think you should too and it's how most people look at the market in different times segments of you know daily weekly monthly quarterly yearly you know those are kind of the tranches of performance and so you know just having some guidelines to that is you can be interesting and can give you some insight to what's happening. You know this is a chart that goes back to 2022 for Bitcoin. I'm looking at a daily bar chart so I've also you know so currently with our moving averages you know we're basically you know below the two-week the monthly and the quarterly averages and the yearly is way below the market so basis the yearly we're still you know underlying positive and all this has just been corrective and the markets really you know kind of at that quarterly average so we're kind of at the on the fence here you know we can also see these previous lows and we're right at those previous lows we took them out and now we're back you know retesting are we gonna is that a retest to go lower or is that a retest to go higher and that's where the subjectivity starts to come into play. What other facts do we know? So I've also highlighted a couple levels here so we had a market that in 2022 was failing we broke below you know support structure or price low and we came back and we retested and then we made a new low so this is a significant momentum area for Bitcoin. So I'm just you know highlighting that area and that's really where the market shifted you know kind of came back up and tested it couldn't roll back over you know classic action and markets taking out a low and not following through and so we break structure here and so what was the you know so this was the significant low that we took out and here's the peak from that low and then here's the failure so this becomes a significant price point as well so I've drawn that in and so what did Bitcoin do at the beginning of this year so it ended the last year it broke above out above here and said hey we're going higher you can see that it you know broke structure of the yearly moving average here and then you had everything kind of in alignment positive but you know just kind of just what's the big picture and then we took out that high so we you know we went above this high point so that's positive but immediately we just screws everybody this is also classic but the fact that we did this is kind of foretelling that this positive momentum is still in play and now you know it's we had a capitulation had a big reversal we're pulling back what I did is just for fun as I added a midpoint to this you know here is the significant structure high point here is a significant structure you know momentum area what's the midpoint and you know it's pretty much where we're at right now so it just you know kind of lean what what you know what is the context so now let's you know now what I want to do is you know really just start to you know kind of start to dial in you really get the context because we want to do something now and you know so we have this bigger picture okay you know we know the market transition higher we know we're above you know the really long-term yearly moving average we pressed it to the upside we took it out and now we're squeezing everybody and now we're back on the fence you know basically at 40k Bitcoin you know it's big you know it really acting like it you know are we is this corrective move going to fall through and continue or not and so as we go dial down that you know looking at other factual things well we can look at time frame structure so time frame structure is going to help help you know to identify you know if we look at the month what was the previous month structure so I'm going to add the previous month parameters just to get a sense here and so for January we immediately you know we took out the previous months high and this was a positive signal and immediately a broke it was interesting it broke back down to that you know kind of midpoint here and then we rallied to made a new high you know so now we're getting a positive signal kind of a you know here's a structure point takes it out squeeze structure point takes it out we're getting a squeeze but you know we have so we have a you know a couple things going on here and just trying to define the context and you know basically basis the monthly we did go above it now we're back below the previous month's close or yearly close actually below the previous month's midpoint but we're still about the previous month's low and so what's a what's a trending market do it makes higher move lows so based on on you know the structure of the market we've made up a new monthly high and we're still above the previous month's low so this is a can you know that that's you know that basically is coming in 37,600 so I'm gonna start to bring in some other analytics here some of our proprietary stuff that you can have access to and what we like to do is look at what we call our sentiment bias or reversal level our level you know where's what's the over and under number for Bitcoin for the month it's way below the market here so we and it's interesting because this is actually coming into play off that other structure point that you know the breakout structure point and for a market to break out and really have a big transition return to the breakout and then go that you know that happens all the time so we have you know another thing that we have is some containment levels we call that our critical range and so based on our critical range the market that came in just above the previous month's low point and the market stabilized there so we have you know so on our you know context on a bigger picture the market stabilized off a containment level it stabilized above the previous month's low point and now we are you know pretty much back on the fence so let's keep dialing in into you know this context to get you know a better view and you know and the markets are like an onion there's a lot of detail to it and so what we look to do is really to simplify that and that doesn't look simple right now let me just let me clean this all up and the other thing I want to show you is our playbook so instead of going through and you know dialing into all different studies to try to come up with what is the market state you know we've developed a quantitative model that is completely data driven that does that for you so the goal of this you know analytics is to find the truth of what's you know what is and so we've created a market grid that's color-coded that helps to I quickly identify market states Bitcoin is currently in what we call a bull trend correction you know markets in a positive bull trend that's having a sharp you know having a corrective break and what part of that are we in that you know did we about to break have we broken already we kind of just correcting going sideways you know that's part of the expectation of a bull trend correction you know markets produced a negative signal against a positive trend you know the market remains firm however is vulnerable to a countertrend corrective break and that's where we are right now you know markets that are in you know might be in a neutral posture and so what's that you know if we're in a neutral posture we have different expectations again we're just setting the context of the state the market that's in a bull trend you know higher move highs higher move lows so you just you know or bear trend or an accelerating bear trend you know so you know the goal is you know from the under decision matrix is to set that foundation you know what is that state and so for Bitcoin we're in a bull trend correction so what we've all traded that state we know the bull trend correction is it's a market that you know we're correcting a bull trend just add throw the throw Bitcoin on here while we're going through this and so we understand the markets in a bull trend correction are we going to continue to correct where are we are is the correction done so if we look at this time frame structure you know the market had are is traded this is the previous days high previous days close previous days midpoint previous days low so the market went above the previous days high point that's positive and now it's you know and it's you're looking it's trying to base above the previous days close which would be positive if we can't do that you know more likely going to retest the previous day midpoint if not the previous days low point so it kind of you know this is kind of resumption of the corrective aspects of this state so we're sentiment though so you know what's the over-under number so sentiments above the market so what this is telling us and it's you know as we define a context and we want to get into you know what's that you know what's the structure of that context where's that context going to change so what what the what the analytics are telling us here is that hey we're in a a bull trend correction but structurally sentiments above the market so what this tells us is that as long as we're below you know basically you know the 41,500 strike this thing is vulnerable to further corrective action this thing is vulnerable to further losses and you know rallies up to this price point or rallies to sell that's what the sentiment bias means so it's telling us that we have a negative bias and we have a negative bias below this price point so next let's put in our containment ranges are you know what we call our critical range with our upside pivot and the downside to it just to get a sense of okay well you know this lower containment area is going to act as the base for this bull trend so if the bull trend is going to remain in force it really should stabilize above 39,000 and if it can't there could be a problem here you know and we might be transitioning to more of a negative state or a neutral situation and again this you know we're looking at this context just in this moment so let's put the you know just for this trade period so here's our containment areas and so it kind you know there's a midpoint level here we call that our directional and our and this lower area this downside pivot area coming in around 39k is above the previous days low point so what you know basically what the analytics are telling us is that okay we had that positive reaction yesterday after that big sell-off now we're you know potentially shifting back into a positive situation but it's it really needs to overcome 41,500 do that and if we can't hold above 39k we're you know things are vulnerable and we could go lower and that's how we read this and so because we're in this state and we and in this structure what are the strategy themes what are the optimal things to do and so again we're just setting the context we know you know we know this market is in a corrective bull trend we know it's negative below this price point what's the optimal thing to do well fade momentum up here well we didn't get that opportunity and we don't always get the best opportunities you know the markets don't always give us something to do we need to be patient what's another good thing to do well what we call a buy DP reversal where the market will come down here take this level out pop back above it and give this a positive reversal signal and that has a potential to be that you know the low point that low lower squeeze for a new you know new reaction higher so this this current sell-off comes down here and we get a failure but it can't hold it we get back above here that would be a trigger and a strategy to look to execute and so what are some other strategies that tell us hey the market might be in you know transitioning or a hedge strategy you know we might be moving out of this bull trend correction into something different well if the market starts you know it's trading below the directional and starts to build negative price structure well the market did that here it broke below the directional but it didn't build negative price structure we didn't see this action we didn't see this action we saw it turn right around so the first thing so so with this so this is this didn't work basically and now we're coming back down here but typically when markets trend they just go so that's that's a bit of a problem the other you know the other hedge strategy is the market would you know break out above here come back down here and stabilize here for you know to start to build positive momentum and it's not doing that so what this is telling us is you know and we're gonna get into that in a moment as well as that you know this isn't really working out too well this headsteam and more likely we're in this theme right now let's go back to the presentation here so we've we've identified the state we know it's bull trend correction we know the structure we know and its bias is negative because the sentiments above the market and we know that the market is you know right now it's not really we know that it's not performing as a head strategy because it didn't it it's it didn't really correct so it's so it currently is in a potentially an optimal theme where it's you know it's performing like a bull trend correction that's what optimal means so what's the next thing we want to do well now that we you only have that context we want to identify you know the real-time facts you know is price action performing to the cure characteristics of the state well yeah it's performing to the characteristics of a bull trend correction is the market holding structure you know the price action holding structure within the price map framework yeah it is we haven't broken structure and let's so what we need to do now is we need to identify is there a strategy theme in play and there's not we have no strategy theme in play it didn't get up here to generate anything it did generate a sell breakout here that didn't work and so currently we have a hedge you know so currently it's it's really telling us that this you know once you see a strategy not work you can just you know literally remove this from the from what the expectation is because if you break structure here it's telling you it's not going to work so typically the markets either gonna perform the expectation of the state optimally it's gonna it's gonna perform as a hedge strategy and if it did neither of these work it's gonna be a non-event sideways mess so currently it's it's performing like a sideways mess it's corrective it's sideways action in a bull trend is correct so we're still in this bull trend correction we're still negative below here but the fact the market couldn't follow through here is telling us that there's really no strategy in play right now but we are performing to the expectation of the state so what's the next thing we want to do well you know we're looking to define an opportunity you know if the markets perform to the expectation of the state and it's holding structure then look to participate in the optimum strategy theme and so that's that's what we're looking to do because if the market is performing the transitional expectation of the state and is breaking structure then we're going to look to participate in the hedge strategy well we've seen that the hedge strategy is not working out very well and you know and then if you know the markets not performing to the expectation of state and it's not holding transitional structure either then there's nothing to do there's no trade so we just back off or you know it's also a sign that you know volatility is going to get crushed so if this if you if those those breaks and structure happen earlier in the trade period you know it's an opportunity to sell premium so currently we haven't had an opportunity presenting ourselves because the opportunities are below the market here at 39k we're looking for a capitulation reversal kind of an exhaustive break potentially here and we're also looking for a potential surge up to this area that just to fade on the hedge strategy side the market broke out to the downside early and it didn't work and and so as the market was failing here it's it's it's a lackluster trade and within this middle zone so there's not a lot to do patience you know is money so you know so let's just let's just you know those are the optimal things to do doesn't mean that the only things to do so let's let's see what you know so the next phase would be you know next part of the decision-maker matrix is to execute your tactics you know and you know standardizing your entry and trade selection you know with the structural foundation that we've created you we can standardize our size management and our position management and then we can optimize our tactics using the order book events so let's talk about standardization so if we look at the market here you know standardizing our entry we can standardize our entry within these zones so it keeps it real simple just hey if you're in this state this structure do this and do it here and then we create these metric boundaries which we define here this is our alert distance and our variance so you have a variance and alert distance then we have a maximum stop distance that show with our application but basically this area of signal acceptance and so sentiment bias since it skews the whole state is the most valuable opportunity and so if we look at you know how do we standardize size management we always we want to bet the biggest in the best opportunity so that's here so if we just simplify things to you know we are going to trade in units of one two or three so opportunities here are a three unit opportunity you can't execute a three unit opportunity at anywhere else you have to this is the only place you can execute a three unit opportunity because that's where your risk is best defined because that is the high point of this bull trend correction the market trades above here the bull trend correction is going is is you know markets more likely going to transition back into a bull trend and it's also the peak of any you know of any corrective moves so if we get a surge up here and the market's going to continue to correct or can go sideways it's going to top out here so this is the this is the best place so since it's the best place we can bet the biggest what what's the next best place well the next best place is here and here those define our critical range so we could execute two units here we could standardize it so I can you know I can trade two unit trades at these areas and at this area you know we could you know it's not listed on our strategy themes but you know this has the potential to be the you know to cap off a surge and it did it's the top of the critical range didn't really get into it a better opportunity to be a reversal at this point versus fading into this nothing happened you know and this is when we take a look at the order book what's happening order book we can get a better sense of what's happening here let's just do that I don't have that much data here but we're just talking about size management anyways so so on the size management and let me shorter time frame here so we do three units here at sentiment and we can do two units at the critical range extremes and we can do one units everywhere else we can you know obviously you know you could add different size metrics with different alignment so if you had alignment you know we had a bunch of alignment coming in at the directional maybe we could beef up our size at the directional opportunities but the fact that you know with with this current market you know the middle is kind of messy you know it doesn't mean there's other things to do and and that's what these you know the other levels can you know can provide opportunity for us you know you know also you know these levels just trading from one level to the next basically climbing the staircase that's an opportunity as well so what do we know we know the energy of the markets up here and basically down here and here's this is pretty much the rotational area and then we can see that we have this previous days close area here so as you know we were basing above that previous days close the market was trying to move higher it couldn't maintain a trade above the previous days high point and we move lower we traded back below the directional so we take a look at what's happening currently in the order book kind of slow day I'm so we're not so excited about a downside breakout below the directional making a play for this area although it's an opportunity and you know and it did not follow through here and if the market's going to you know work net this negative structure it's going to continue to do that and it's and once it breaks a metric boundary it should stay below it it should absolutely stay below the figure and you had price structure here too and it couldn't do that and so now we came down here and we took it out again and you could see that we had this resting paper here was coming in alignment with the figure and it's you know base pretty much based off of that level I think we have that here so you know this is kind of a little bit left over liquidity that was that got taken out here on this little this little bit here I actually like this trade here where you the market had this resting paper at the figure this is in alignment here and one thing that our playbook does it also gives you reward metrics so it tells you the markets trade eight bitcoins trading $800 segments so at least a hat you know we call it average price map distance so at least a half a p.m.d. of 400 bucks is what you know is what you're looking to take out so when if you put you know you're putting capital at risk you're looking to go for at least 800 bucks you'll take some money off the table at 400 but you know ideally you want to get 1600 bucks today is not a big movement day but you know this is an $800 move these are $400 moves you know these are 400 segment moves so here this this set up a 400 you know half segment move and what I like about it is you had the alignment you had liquidity resting paper here in alignment with our structure you know this is our kind of our pivotal structure for the day and the market you know it took out that liquidity and then immediately so it's you know just keeping it really really simple so the market comes down here takes out this liquidity it's it's at the figure here's the variance here's the alert distance this negative structure should just continue and we should you know this thing should just release and you had some decent size from nowhere and then the market you know break structure here and says these guys just got screwed and you're sitting here what's the expectation a retest of the CR plus you know a half APMD move half segment move but you know when you're here you know your you know your risk is that you know the market really should not trade below this metric boundary so if you're risking this to make at least this if but you know you're really going for this price point and you and this gives you an opportunity to take something off the table here and then the market holds structure here are we going to start to build positive structure you know we are we going to start to you know to move higher you get you know this is some little volatility so you have a low we have a low okay we're going to start to you know are we going to start to base off this this area and start to move higher you know this level becomes a validation point and we can see we had some liquidity building up here kind of comes back and you're seeing the liquidity come in at the bottom of the figure so this is another way I like to use book map is that it helps me to align the microstructure with the macro structure so I know this is the previous day's high point and I also know this is the validation point to an extension higher the market already told me had it's having issues because it got above here and it couldn't stabilize and it failed so it's right here it's telling me it's a mess and that more likely we're not going to get followed through in either direction so if we did get a hard break we're a buyer and if we did get it hard a big rally we're a seller you know because the expectation is this you know we're not really gonna see any follow-through but when you see the order book in alignment with structure you know that gives you insight that you know you might need to step in front of this thing if you want to you get involved with it and this is kind of classic to where you come in you get about you know buyers are you know just scrambling to buy in front of the figure it's typically a good tell there's a problem and then when you have less intensity of trade coming in here that's another tell you know basically just setting up a retest and trading these in these small ranges and so currently what we're keying off of is the previous day's close are we not change positive or negative for the day and the fact you know and so then you know now looking at the current order book and what's happening you know we did have the market trade back below here we had some you know these guys are kind of stuck we know it's a it's a sideways choppy day you know are we you know do we want to see the market but bite into some of this liquidity here some of these people scrambled before the thing takes off I also like to use the VWAP so currently we have the VWAP just above this metric boundary so you know basically using 40k so as long as we're and that's the figure anyways so as long as the markets trading below 40k this thing is a mess you know basically you know kind of be you know be careful if we get back above 40k we start basing above here we could transition I but more likely this day's over and we're really not going to do much it's really what this is this is telling us so you know identifying the context of the market with the playbook a bolter and correction identifying the structure we know that we know the key main structure points are you know 41,500 to the upside and 39,000 basically to the downside that's our big structure band markets in corrective state part of that part of your corrective states where they do they go sideways the best opportunities are going to be at the extremes can be a potential for rotational move through the pit in the midpoint but we saw that that didn't work so you know we identified that context identify you look at the real-time facts opportunities really didn't come into play and we don't really have any much to much to go on to execute tactics personally I like to just wait for the best opportunities and you know it's not that it's not interesting for me to put capital at risk you know to take advantage of small opportunities I want to take advantage of big opportunities you know we do have figures coming out tomorrow so the market you know basically just a classic you know wait and see day so for now absolutely anything can happen things can pick up the market has digested a bit but end of the day if we did get any kind of sharp search the upside or downside you know the expectations were probably not going to follow through so it's always the same you know identifying the context the structure and then what's more likely to occur what's the if then the big thing is to you know maintain a fact focus always going back to the truth are avoiding you know if you have subjective analytics understanding that they are subjective and and don't let them scare you you know don't let them you should not hesitate you know and that's what our method looks to do and what we do is we incorporate a statistical outside view to help you slow down that decision-making process to minimize those biases so you do all this work or you got you read something somewhere and you have this you know net I'm not negative or I'm not positive but what's the truth what's the truth of the context the structure and what in the behavior of price within that context and from Daniel Kahneman's book think you fast and slow the outside view offers more accurate prediction than the inside view so in trading especially it's such a mind game that it can mess with your head you know are you is your are you just hoping and talking your own position seeing things through you know through your your bias goggles and that's what you want to look to avoid and that's what these tools that presented will help you do so I hope that was interesting you know if it gave you a little clarity and you want to learn more you know it's a new it's a new approach new way to look at things actually an old new way this is the kind of you know this is the fact-based foundation and absolutely you know there's different pieces to it and just picking up one layer at a time to build you know layer in the fact focus is the way to go so if you know if you appreciate this video you know like it forward it to people that you think would like it I invite you to you know follow me on X check out our YouTube channel as well as our sub-stack Dharma Capital Trading and if you have any questions you can email me at info at DharmaCapital.Trade or you can post them in the Discord channel. Good trading! Cheers!