I’m going to tell you a secret about markets that took me a very long time to figure out.
Making money trading is simple.
But the simplicity is masked in complexity. Every place you look there’s someone going on and on about the complexity of markets, heck Bloomberg charges $30k a year to give you as much complexity as you can handle.
Let me show you how I figured out how to bust through all the complexity to find a massive edge that is simple and right in front of you almost every day.
Not only that, I’m going to make it worth your while, I’m going to share with you a very actionable trading strategy that you can put to work right away.
This is the story of how I went from a piking around trader (a gambler really) to a consistent full time trader.
This is my story.
The year was 1999, and the economy was incredibly strong, with everything Dot Com screaming higher.
There were companies that by simply adding .com to their name, would double, even triple in value almost immediately.
The economy was so strong that the United States even had a budget surplus!
While currently trillions of dollars in debt, this might seem impossible, but I’m here to tell you it happened.
I had just gotten out of the Marine Corps and was a new guy on the trading floor at a proprietary trading firm in Southern California.
This wasn’t one of those screaming yelling trading pits, this was a digital trading floor, and at the time that was a brand new concept.
A room full of dudes pounding at keys with a bunch of really big monitors, by big I mean thick 19” monitors…not big the way they are today.
It looked a lot like this.
There was plenty of yelling, plenty of locker room humor, very charismatic and funny traders, but it was all trading on screens.
Everyone was trading internet stocks, and most of the names don’t even exist anymore.
Traders would regularly have 100% days, both up and down.
One day a guy would make a million dollars, and fly everyone to Vegas to party for the night on a private jet. The next he might lose it all.
When I started, my mentor took me aside and told me, “We don’t mess with Internet stocks.”
At the time, all the action was in internet stocks, so I was kinda shocked.
He taught me my first trading system.
It was an opening range breakout system, wait for the first 10 minutes of the trading day, then go long or short any of the five stocks I was watching when they went above or below the 10 minute range.
I’d take profits within seconds up to a whole minute after getting in the trade.
I was a scalper.
We’d do this 50-100 times within the first hour and that was it, that was the trading day.
It was steady work, consistent.
I started out making a couple hundred dollars a day, then that turned in to $1,000, then $5,000…it was amazing.
But it wasn’t ever $1 Million in a day.
As long as I had my mentor working with me it was good. He kept me on track, kept me disciplined.
Then one day, he was gone.
I was on my own to trade the system. The system that was so consistently profitable. The system that was so easy to manage. The system that I could make a month’s salary, in a day.
Well, that system stopped working. It might have been that I didn’t have my mentor to help me anymore, or it might have been something else.
Either was,y I was on my own now. You can guess what happened next.
I moved to a new desk on the trading floor to be closer to the action.
My trading evolved, and I started getting caught up in the action. But these guys were gamblers; they weren’t trading any system. They’d trade every headline, every event, and any little bit of action was all they were after.
I tried to do the same.
Eventually, the Dot Com bubble burst, and the firm shut down as the economy entered a recession.
For the next few years, I would open an account, have moderate success, and then blow it up again.
I never got back to the scalping glory days.
Meanwhile I was all in on tech, co-founding a startup, raising venture capital, teaching myself to code and anything I could learn about technology.
It was new, it was obviously going to change the world, and I wanted to be a part of it.
Stick with me here, this part is important.
The more I learned about technology, the more I learned about how systems work.
If this happens, then do that. It was all very algorithmic.
But the routines, the patterns, the rules based procedures could all be standardized, tested, and improved upon.
This is exactly how my mentor built the original scalping trading system that he taught me.
So I went to work.
By this time there were a lot of online message boards, there were trading platforms like Tradestation and Ninjatrader that you could use to write trading algorithms.
People were sharing ideas, talking about how they were doing things, it was this wonderful collaborative world. And we were all trying to figure it out together.
Eventually, I came across price action trading.
There was this doctor who gave up medicine to trade full-time. He was doing bar by bar analysis, on every single bar during the trading day.
He would make a trade decision, entering a trade, exiting a trade, adding to a position, cutting risk, raising stops, on every single five minute bar.
The crazy thing was he was profitable every day. Not on every trade, but at the end of every trading day, he had more money than when he started.
His name was Al Brooks, for those of you who are wondering.
From him, I learned price action. Well, at least I learned enough to identify patterns, and when I had a pattern, I could turn it into a system.
I didn’t know the “right way” to build a system, so I just did what I would do with any other system I would do in my business.
Let me show you how I did it, and by the way, this system still works today.
I chose one setup, I wanted it to be easy to identify, repeat often enough that I could trade it consistently and predictable enough that I could be ready for it when it happens.
Here’s a screenshot of the setup from the master himself, Al Brooks, from back in August of 2018…I learned it from him ten years earlier and it still works today.
Here are the rules:
Step 1: Identify overall longer term trend (daily chart) – this works best in an upward trending market.
Step 2: Wait for first 15-30 minutes of the regular trading hours market open
Step 3: Let the market drop on big candle size (the first 15 minute candle on the chart)
Step 4: Wait for inside bar (the second 15m bar on the chart)
Step 5: Place a buy stop 1 tick above the high of the inside bar.
Step 6: Place stop loss 1 tick below the low of the lowest bar.
Step 7: Exit on the close of the first down bar.
Like I said, it still works today. It literally happened the other day, January 28, 2025, for a nice +3.15R win.
Having a core setup like this is just one component to a real trading system.
In the next few posts I’ll walk you through the other major things I’ve learned and how they can change your trading.
