Rayner (00:00)

Hey hey, what’s up my friend?

So in today’s episode, we have now Axel Kibar.

He’s an ex-fund manager and a classical chart pattern trader.

So one thing that is interesting about Axel is that in case you follow him on Twitter, or nowadays they call it X, right?

You realize that his charts, right?

Truthfully speaking, it’s one in every of the cleanest that I’ve come across on the platform.

He doesn’t have those messy indicators, squiggly lines covering all around the charts No…He’s charts are very clean and one take a look at his chart.

You’ll sense what the market is attempting to inform you.

So, Aksel has probably the greatest charts that I’ve seen on the Twitter platform Or should I say, X platform.

Anyway, if you ought to connect with Aksele, I’ll put his social media profile in the outline below.

Now during my conversation with Axel, we covered a couple of things.

First, we talked about his life in the military, what are the things he did, and the teachings he learned back then.

Then we spoke about how he landed a job as a fund manager.

Let’s be honest, it is a job that I feel most of us wish to get but we just by some means do not know the right way to go about doing it.

So he shared the method that he did to land a job as a fund manager.

Then moving on, he talks about classical chart patterns because that is the way in which…

He trades the markets, he shares with us what he looks for within the charts, his entry, stop loss, and targets.

Then he also shared the 4 forms of breakouts that I feel every trader should know because not all breakouts are equal.

So he shares these 4 several types of breakouts, how it’s best to go about identifying them, the right way to trade them, and the right way to manage the breakout trades, depending on the variety of breakouts that you simply are encountering.

Then finally towards the tip, he shares how he goes about scanning the markets for trading opportunities, his each day routine, and his weekly routine.

So we’re gonna cover all this in today’s session.

Go take heed to it at once.

Rayner (02:01)

Okay,

welcome Axel to the show.

I’m so completely happy to have you ever today.

Aksel (02:07)

Hi, Rayner, it is a pleasure to be a part of your show as well.

Rayner (02:12)

So to kick things off, I once heard that I feel on one other trading podcast that you simply were in the military, so possibly to kick things off, what were you doing in the military previously?

Aksel (02:23)

Well, the military is in Turkey, it’s a compulsory service. So we cannot exactly say that it’s hardcore military service, but everybody has to do it.

And I used to be one in every of them as well.

So mainly, that is how it really works. Over time, they shortened the period of the military service in Turkey.

My parents used to do it for 18 months and possibly much more.

Some have done two years of service.

So in my case, what happened is that in case you’re a university graduate, you might be only doing it for six months.

So the time shortened and shortened, and now I feel it’s a paid service.

So in case you, it’s like mainly they hire military personnel.

So now what I even have done is six months.

I had the choice to do it for 12 months with the next rank, but I made a decision to go for six months as a soldier.

I used to be a Marine soldier on the West coast of Turkey.

It was, I’d say everybody to start with is petrified of the military service and so they feel prefer it’s a waste of time and it takes away from their life, etc.

Then once you seek advice from individuals who have done it, they all the time have good memories.

I never thought that I’d have good memories after it.

But it surely’s true since you get to fulfill plenty of interesting people there from different parts of the country, different levels of education.

It’s funny, it’s stressful, and I mean there’s all the time a risk of war, nevertheless it’s more of a defense a part of things that keeps you usually alert, not that you simply’re gonna go to war, but at the bottom mainly, there was all the time stress.

That stress keeps you alert and to start with, a couple of months, due to that stress, you forget what you were doing in real life.

The primary month is normally the essential training, disciplinary training, the orders, and so forth.

After the primary month, there’s the ceremony and then you definitely move to the following stage, wherein you spend five months and somewhat bit more expert status.

In my case, almost in everybody’s case, they struggle to look on your educational background and check out to utilize that.

So in case you’re an engineer, you could be collaborating within the automobile workshop.

I used to be an economist, so probably the most suitable section for me was the accounting department of the cafeteria.

So I used to be chargeable for six different stores and mainly, this got here after my 4 years of economics study and I’d say that I learned probably the most in…

In that military service accounting department or the supermarket section, then 4 years of economics study.

So it was such an interesting experience that you simply get to learn, because we had the bottom of a thousand people, and a thousand people refill the bottom, after which they get their training after two, three months.

They’re moved to their original military bases.

So we were mainly a training camp form of a spot and so that you max 2,000 and then you definitely drop 200.

I even have seen this cycle twice during my six-month stay.

When it reaches 2,000 people, you are talking a few huge economy there.

Okay. So as an instance — The restaurant doesn’t have good food.

Everybody piles as much as have a toast or some form of snack from the cafeteria and the sales go up like crazy So military will not be purported to make the most of sales.

So we buy things with boxes And once you divide the items into 25 units or 30 units you get the worth tag off the associated fee is 22 fills

So you might have to, you can’t round it to twenty fills.

You may have to round it to 25 fills.

So once you round it to 25 fills, you get 10 to fifteen% profit, and over 1,000 units to 2,000 units of sales, you get to see an enormous profit-building up within the money registers.

So… Principally, I’ve seen how the population has an impact on the economic success of small stores.

So the masses going wild on water in the course of the summer, and all these small, small profits piling up is supplying you with some form of crazy profit at the tip of the month.

That profit was being distributed to soldiers in need who did not have financial support from their families.

So like some form of a salary being given to people in need.

That was the economic background of what I even have been doing. I used to be chargeable for six different stores at the tip of every month.

We used to attempt to match the money register and the items that were being sold, etc.

Ordering of utilities, toilet paper, T-shirts, tea, you name it, the whole lot that was available.

So buying the newspapers, and ensuring that the stocks were available were all my responsibility and I used to be managing six different stores out of which three of them were kids which have had a university background.

Three of them were primary school graduates.

In order you may see different educational levels from different parts of the country and the university grads were in a position to match their money pile since you give change.

You’re taking, as an instance — a thousand Turkish lira and also you give change.

Sometimes the opposite kids were making mistakes.

So there have been shortfalls within the money.

In order that they needed to put it from their pocket, from those mistakes.

Yeah. Ouch.

Yeah. In order that’s life.

So that you get to see different parts of the country, and different educational levels, and these all were good memories because all of them taught me what life is about.

Because you aren’t getting to see, once you’re working as an economist or an analyst in a bank, you aren’t getting to see everybody, every kind of profiles.

But within the military service, you get to share the room with them and with different people, different educational levels, and different statuses.

So it was a distinct experience.

I enjoyed it.

Like individuals who have commented on it after completing their military service, I also share the identical views.

Now, they all the time say that even in case you want, you can’t return and that is true.

Like, and I’m all the time telling my friends and my family, I would not mind going and spending two months now with the identical crowd and doing the identical things.

So it was that part. It needed to be done, but I’m glad.

I used to be given the prospect to do it for an extended period.

Rayner (12:16) 

I can relate to it as well because in Singapore, right, all of the mail we have now to serve a compulsory two-year national service. I mean, it was once 2.5, but now it’s for 2 years.

Then they slowly cut it down identical to, you realize, what you said on your country.

So yeah, many lessons learned.

I feel for many of us who accomplished our time in the military after two years, all of us form of like nodding.

Yes… That was a very good experience.

We initially, once we thought getting into is a waste of time, you realize, I’m holding back my profession But once you look back, the teachings learned are stuff that you simply won’t learn elsewhere.

You find out about how people behave, right?

Their true colours, you realize Your EQ, the way you interact with others of various statuses others of various personalities and backgrounds.

So it was very enlightening for me as well so same sentiments, right?

As you’ve got shared after going through the military.

So my next query to you is that, you realize, regarding the military.

So what are a number of the lessons that you simply learned right while going through that six-month journey in the military?

Aksel (13:13)

The teachings… I mean, relationships matter.

That is something that I’ve learned from, it’s a reproduction of corporate life as well.

The picking order ranks,

Ah.

What you ought to be doing and what you mustn’t be doing, mainly, rules-based, strictness, the discipline.

All those were very, very helpful later in life that you simply get to see those and then you definitely move to corporate life and even in life.

You get to see that, okay, you realize, that is the pecking order.

We’ve got to respect that.

We cannot step ahead and step over the hierarchy.

There’s that hierarchy. It must be there.

We’ve got to follow certain orders and typically, I even have all the time been a disciplined person.

Be it with following up on things and waking up time etc.

So those qualities helped me during my military service. So many funny moments related to that.

Rayner (15:15)

You could possibly share any funny moments that come to mind?

Aksel (15:18)

I mean once you’re serving probably the most essential things is we get them because we used to drop to 100 people in the bottom from 1000 and when it’s 100 you get to do all of the chores yourself 100 people so you can’t give it to the newcomers so you might have to handle it yourself.

Serving was one in every of them serving at different parts of the bottom and noon at 10 o’clock.

We used to begin 10-12, 12-2, 2-4, after which 4-7 because we were short in numbers.

Day-after-day they used to jot down a location to be served.

You go and get your gun and go to the serving point.

The place that I used to be guarding was the ammunition depot, which was right across the cafeteria, supermarket, and warehouse.

So my friends used to pass by in the course of the night once I was serving.

Also they are serving. Um, they were a duo and I used to be, uh, alone on one side and, um, they used to ask me, come on, are you able to get us some tea from the within?

I used to say… No way.

Like I cannot move from my place because if, uh, the commander and, and, uh, the commander comes, you can’t, you can’t try this.

In order that they used to vary with me a spot.

Considered one of the blokes used to remain in my place.

I used to walk with the opposite guys and open the shop and get them in the course of the freezing winter, some tea, as they were serving.

So, I mean, these are friendships.

You can not break that since you live with them. You are sharing the space. Those are the small things that you might have to violate.

But, um…

Yeah, good days.

Rayner (17:55)

Once you mentioned serving, do you mean staying on duty, remaining at your spot to make sure that nobody comes as serving?

Aksel (17:59)

Yeah

Rayner (18:01)  

Okay, okay.

Only one last query before we move on. Move on, right?

In order you were, you realize, in command of the shop, you realize, selling items.

What are a number of the more popular items that, you realize, people in the military love to purchase?

Aksel (18:13)

Uh, it was more food items because every time there’s the food within the restaurant will not be that good.

They used to pile up for toast and tea within the winter.

So tea was one Turkish lira on the time before all this inflation and so forth.

So the guy that was managing the tea store one month, had an enormous shortfall, a considerable amount of shortfall.

After we asked, we realized that his friends were coming and saying, can I get one tea and he gives the tea and I can pay for it later.

So one Turkish lira will not be possible to gather from here and there.

So it piles up.

100 kids, it is a hundred Turkish lira shortfall.

In order that’s like 10% of the population of the bottom in sooner or later.

So in case you repeat this five times a month, you might have a shortfall of 500 Turkish lire and that is a large amount where the salary that the military service was giving to the soldiers on the time was 35 to 40 Turkish lira.

In order that’s 10 times the 12 months the cash that they were paying for the month.

Yeah. OK.

Rayner (19:50)

So let’s possibly now move on and talk in regards to the fund management world, because from what I’ve gathered, you were a fund manager back within the UAE.

So curious to listen to, what is the process like of getting such a job back then?

Aksel (20:11)

So here is the way it began.

It’s an interesting story as well. After the military service.

This military service comes after my master’s degree in Canada.

So I used to be one in every of the primary within the family that traveled abroad and studied after which got here back, finished the military service and after the military service, I began in search of jobs and I discovered a few jobs in Turkey.

I began in a guarantee bank, one in every of the largest banks in Turkey.

Of their asset management department, I began working, nevertheless it was a two-week journey because meanwhile, I used to be receiving emails from a few friends that they were in search of a CMT in Abu Dhabi.

The National Bank of Abu Dhabi was in search of a CMT Charter and on the time I began working in Guarantee Bank as an investment analyst.

In order that had rather a lot to do with the basic research and I enjoyed charts and I enjoyed the technical side.

But as a start, I used to be okay to take the investment analyst job.

Meanwhile, because I received this email from one other friend for the third time, I said there was something about this. I should consider it.

I didn’t know where Abu Dhabi was on the time since the commercial was 45 minutes from Dubai.

So once I talked to friends, they said Dubai is the Latest York of the Middle East.

So I began searching, I began searching the bank, National Bank of Abu Dhabi, a semi-government-owned bank.

After I began searching, I said — That is a very good opportunity, possibly I should apply for it.

I applied for it.

The reply got here as we would have liked somewhat bit more experience in the sector and this was in 2007.

In 2007, I graduated from economics in Turkey in 2004, got my charter, after which after that masters.

After I was studying economics, I also did an internship at Yuppie Credit Bank, which was also an enormous, one in every of the largest banks in Turkey.

So while doing all those, experience was impossible to suit somewhere.

You can not get the working experience.

I had an internship experience, which was almost like working because I did half-day school, and half-day bank for 3 years.

In order that they asked me — They told me that we were in search of more experience.

So I didn’t take no for a solution.

I wrote back because I used to be very comfortable with my knowledge of charting and technical evaluation.

I knew that I used to be good at it. So once I wrote back, my ex-CEO liked the reply and he liked that I challenged it and he got back to me and so they arrange an interview call and after that decision, they were convinced that I had the knowledge which probably compensated for the experience side.

I needed to excuse myself from Guarantee Bank, which they weren’t very completely happy with.

But the upper the management, the more understanding they were.

So the CEO was more understanding and he said that we understand it is a a lot better offer and fewer places available if things don’t go well.

So I took the offer and I flew to Abu Dhabi.

I began as a technical analyst on the National Bank of Abu Dhabi.

It was 2007, and we were gonna get hit by the subprime mortgage in a couple of months.

So going to a land.

Uh… which was probably the most affected by subprime mortgage and the actual estate crash was a extremely interesting experience because once I went there uh… the markets were already uh… falling from 2005 to 2007 they were already in a downtrend.

People were uh… people didn’t wish to even talk in regards to the stock market and I saw the chance that the market is bottoming, no less than for a brief relief rebound.

At that time, I joined the department, asset management department as a technical analyst.

I had a pair of excellent calls since the market was rebounding and nice classical chart patterns were appearing.

So It was a possibility for me to indicate my skills, which afterward allowed me to administer funds because I had some good calls and and caught some nice ideas.

In order that helped me to get the fund management to the fund management site, which I used to be given in 2008.

The UAE, National Bank of Abu Dhabi’s UAE trading fund, was the biggest fund within the UAE on the time.

I feel somewhere around half a billion dollars.

So I began managing that through the subprime crash and UAE will not be diverse, it was not a diversified economy on the time.

Now there are more IPOs, malls, etc.

The entertainment side is being IPO’d.

There was not even an airline that was IPO’d on the time.

So it was more like banks or real estate and each were getting hit due to the real estate collapse but banks held a lot better real estate side of things fell apart so it was a difficult period to administer that in an illiquid market on the time of the crash.

That is how I began first as an analyst after which as a fund manager.

Rayner (28:25)

In order a fund manager, how do you then manage the cash?

Do you day like, hey, Axel, here’s $10 million?

Grow it to $20 million, or do your best, or whatever.

How’s the means of managing that cash?

Aksel (28:43)

So we had our funds benchmarked against the MSCI UA index.

There was this MSCI UAE, domestic MSCI UAE international index.

There have been two forms of indices.

Domestic internationals weren’t allowed on the time to speculate in certain stocks, strategic telecom firms, for instance, weren’t available for investment.

But local local funds were able to speculate in those.

So for instance, we used to take a look at the MSCI-UA International Index and MSCI-UA Domestic Index and we used to run it, run the funds against this benchmark.

We had 25 to 30 names in it roughly possibly less even.

You do not have a large universe…

Okay and real estate for instance MR properties was near 25 to 30 percent of the fund.

So it’s mostly taking a bet on big names by just underweighting the actual estate sector from 35 to 40 percent to twenty percent was allowing you to generate alpha.

It was a bet on whether you are into the banking sector otherwise you’re into the actual estate sector.

By making that decision on the time of the subprime crash, which began hitting the UAE market somewhat bit later than the US market.

The crash began somewhat bit later.

I used to be in a position to liquidate big amount of enormous amount of real estate and on the time, the Dubai real estate got hit greater than the Abu Dhabi real estate because Abu Dhabi was one step behind by way of development.

In order that they weren’t caught in the course of the event stage.

They were still initiating projects and attempting to meet up with Dubai.

But Dubai already built its man-made islands, villas, high rises, and marinas.

In order that market got hit first.

So the stocks that were listed on that exchange were more liquid as well.

So it allowed me to cut back my exposure on those.

The fundamental idea was if you end up managing it against the benchmark, you might have somewhere to carry on to it.

It’s easier than a whole blank sheet because you only need to take a look at the relative performances against the index and see the stocks which are underperforming.

Stocks which are below their long-term averages, start with that.

You do not need to be neutral even in those names.

So any money that you may raise, I used to be allowed to enter MENA equities outside of UAE.

So we had the allowance of a 30% off index exposure.

This was giving me on the time my CIO told me that that is more like a satellite approach you are applying here.

So the the underweight positions, the money that you simply get from from those I used to be applying with into MENA equities, Saudi Arabia, Qatar, Oman. So I created this wide opportunity set for myself and commenced.

Exploring breakout ideas.

In order that’s my basic place to begin with the breakout strategies because I used to be attempting to capture a few weeks of strong directional movement with this cache that I even have taken out from underperforming names.

Attempting to generate more alpha on the Directional moves that I used to be in a position to capture in off-index names.

Once you go into off index you might have slight risk since you’re moving away from the benchmark, but that is the only strategy to outperform an index.

You can not hug the index.

You may have to maneuver away somewhat bit.

I used to take, for instance, 4 to 5 different positions outside of the index and check out to capture those directional moves, which brought me to my current strategy today.

That you just start with a blank sheet and also you take a look at a large universe of breakout ideas.

Rayner (34:25)

This brings me to my next query which is you realize why breakouts I feel from what I’ve gathered you’ve got tried many forms of trading approaches right?

Indicators you realize patterns and stuff like that and now I feel you mentioned you realize you went with the breakout so why break out?

Aksel (34:40)

Why break out?

It’s a very good query.

After I joined the National Bank of Abu Dhabi, my CIO was advanced in charting and technical evaluation.

He had this information.

He sat with me and he said — Axel, in these markets, these markets are momentum-driven.

So there are fewer market makers in these markets.

It’s more emotional psychology-driven moves.

With that mindset, I went through the entire universe within the region and commenced in search of those forms of tight consolidations and the way stocks are behaving and so forth and I got here to understand that…

Yes, you might have increasingly more stocks breaking out of a consolidation trends are more persistent.

It will not be, people are usually not feeding off those trends, they’re piling up into those moves.

That is how I began applying flat-range breakouts in stocks.

It was more of a form of a direction that I used to be pushed towards to explore these side of things.

Then as I looked increasingly more into breakouts, I got here to understand that by just adjusting the time-frame, you continue to have the prospect, even in international stocks.

Some of these consolidations that you may play as a breakout strategy.

Rayner (36:43)

So would you say that, you realize, earlier you mentioned the, your CIO said that in these markets, I feel he’s referring to markets that are less watched or possibly markets which are usually not as popular, like possibly stocks like Tesla, Apple, etc?

This sort of stocks, they break out are likely to be more real in comparison with the more popular stocks like, you realize, Tesla, Apple, Amazon.

Those forms of breakouts, are likely to not work as well.

Did I get that right?

Aksel (37:07)

Yeah, I can say that.

The preferred names are more crowded, obviously, but that doesn’t suggest that you simply cannot find breakouts in those names.

It’s just they probably form less regularly.

For instance, on Tesla, you would possibly discover a five-year-long consolidation breaking out, but that is a five-year-long wait.

For those who go and check out to seek out two, three-month-long consolidations, textbook-tight consolidations, it may not occur on Tesla.

Less popular names may need those opportunities more regularly.

But very liquid and crowded stocks offers you less frequent opportunities like that.

For that reason, I made sure that I checked out a large universe.

I spent plenty of time going through charts.

For me, ticker doesn’t matter.

So I do not even take a look at the ticker. I just take a look at the chart itself, the correct side of the chart, and check out to see the consolidation that I’m in search of.

So many persons are attempting to give attention to too many patterns at the identical time while taking a look at a single name, which is forcing them to seek out something.

On the chart which does not exist.

So what I’m doing is that I even have a wider universe and a couple of select patterns that I’m trying to take a look at.

So I’m not limited to a crowded trade.

I can take a look at less popular names and check out to capture that directional movement as well.

Rayner (39:26)

Okay so would you then share what are the things that you simply search for in a chart from what I’ve gathered, things like rectangles are one in every of your favorite patterns, so possibly you may go into some details and share what you search for?

Aksel (39:38)

So as an instance, to start with, my predominant motivation is to search for horizontal patterns which are horizontal having the ability to manage the trade with a predefined stop loss.

So for instance, a symmetrical triangle has an upward slope and, a downward-sloping upper boundary.

On the time of the breakout, you act when the stock is breaching the upper boundary and also you place a stop loss below the pattern boundary.

That is the logical place to place a stop loss, a protective stop loss.

So right after that, if the stock starts pulling back sharply, it goes back to the boundary.

It’s below your stop loss, however the pattern will not be violated.

In order that’s a challenge with diagonal boundaries, trading the diagonal boundaries. And latest traders, latest analysts all the time have this tendency to start with to attract trend lines and diagonal boundaries for some reason.

Which…How can I say takes away from their couple of years of practice to give attention to horizontals until you realize that the meat is definitely within the horizontal setups?

I lost as well easily one to 2 years of my time taking a look at these trend line breakouts and so forth.

Is the horizontal setups.

So out of the eight classical chart patterns I even have defined, seven of them are horizontal setups.

So for instance, ascending triangle, descending triangle, head and shoulder continuation, head and shoulder bottom, head and shoulder top. Rectangle is one other one.

The cup with the handle is one other one and the eighth one is a symmetrical triangle.

That is probably the most popular.

So I only take a look at a symmetrical triangle as a chart pattern with a diagonal boundary.

But out of all those, my favorite is a rectangle due to its frequency.

So frequency is vital.

You do not wanna find yourself with 50 ideas for the entire 12 months.

You need to have 100 ideas, and 200 ideas to select and pick from because once you discover the thought, it doesn’t suggest that it’s a very good trade.

You may have to return and check barely its fundamentals, the quantity pattern, et cetera.

If there’s a latest spending right before a financial announcement, you do not wanna trade that pattern.

So you wish a wider opportunity to sell and Rectangle provides that.

So…I got here to understand that increasingly more rectangles are appearing on charts and so they find yourself being reliable.

 Just to present you some statistics over 7 years of chart pattern signals, I even have 1526 occurrences.

654 were rectangles.

So near half of them were rectangles that formed on price charts.

Now this might be a bias on my side since the more I realize that rectangle is succeeding or they’re reliable, the more my eyes are in search of that.

But additionally rectangles are easier to acknowledge on the worth charts because they’re so clean tight consolidations on the worth chart.

So out of those 654 over the past seven years, 415 of them reached their price objective giving successful rate of 63.5% so the general success rate for eight chart patterns is at 59.5%.

So clearly rectangle is above that average supplying you with the upper hand that in case you carry on specializing in rectangles, you’ll have a greater edge find profitable setups.

For instance, people say, what’s the requirement to seek out the rectangle?

What are the qualities that you simply’re in search of in a rectangle?

For me, a rectangle must have a minimum of two touchpoints.

So you might have two highs to attract a line. However the third one, if it is a breakout, it’s less reliable than the fourth one when it is a breakout.

So I like several touch points to a boundary.

My eye keeps on in search of these more frequent tests of a pattern boundary and I feel that the more tests of a pattern boundary, the more valid that level is.

So around that level, many transactions occur.

So buying and selling happens.

So it’s a mean, it’s a value area.

The more developed it’s, the stronger the breakout that follows it.

So even with head and shoulder continuation or ascending triangle, the identical thing applies when you might have that horizontal boundary.

I prefer to see several tests of it.

If possible, three, or 4 tests, after which the fifth one is a breakout or the fourth one is a breakout reasonably than the third one is a breakout.

So with that, I even have more conviction to go ahead with that breakout signal.

Rayner (46:14)

Okay, as an instance now we have now possibly three tests and now the worth is about to check it for a fourth time, right?

So what’s the particular pattern trigger, whatever you ought to call it, that can inform you, okay, now it is the time to purchase?

What is the thing that you simply search for?

Aksel (46:28)

So ideally, the stock needs to interrupt out strong.

Now there are different methods to verify a breakout and that is one in every of the questions that I get rather a lot.

I feel like plenty of persons are spending an excessive amount of time on this, specializing in this, than actually specializing in what matters.

So what they’re specializing in is the right way to avoid the false breakout and I all the time say that there isn’t any way you may avoid a false breakout.

False breakouts are gonna happen.

Okay.

So it is a trade-off now.

The breakout takes place with a protracted white candle.

That is a breakout confirmation. But then we’re late.

For instance, gold on a monthly scale, huge monthly candle, it is a breakout, but we’re late.

Well, in case you’re taking a look at a monthly scale price chart, that first month of a breakout from a five-year lock consolidation will not be gonna be over in two months.

So you might be talking a few multi-month-long uptrend that is starting.

It’s okay to present away the primary 5% or 6% of that move on a bigger scale.

So ideal condition is to look and wait for that long white candle to happen.

Okay.

What in regards to the each day charts?

If we wait for a 6% move, the move is as an instance 15%, half of it’s gone.

Yes, I agree with that.

Then you definitely need something else.

Something else must be placed within the strategy.

So one method is in search of an ATR based entries.

So that you define the upper boundary, okay, and ATR is the typical true range. It’s the volatility of the stock.

As an example 10 periods of ATR.

You may take 10 periods of ATR and add a certain percent of that ATR above the boundary and to be early, you act with a stop limit order.

What is the trade-off?

The trade-off is that at the tip of the day, you would possibly find the stock not breaking out actually.

So your protective stop is below the pattern boundary and also you’re in a stock that did not break out strong.

But that’s the trade-off, we have now to face that trade-off.

Now that is gonna reduce your win rate, but your reward when it breaks out goes to be much larger than your reward once you wait for a confirmation by the tip of the day which is able to compensate.

So your reward to risk goes to extend from as an instance — Two one to 2 to 1 to 4 with that variety of early entry but your risk reward goes to enhance.

So plenty of people don’t need to be flawed and so they wish to avoid it.

So it’s like a trade-off. So plenty of persons are getting into between this.

Wait for confirmation, but we’re late.

Don’t wait for confirmation.

Act early, but we get false breakouts.

So the strategy to compensate is to just accept that when it really works with a 40% win rate, your reward goes to be 1 to 4 or 1 to five, which is able to compensate for the lack of win percent.

So these are the 2 things that folks should make peace with.

You either accept a 60% win rate waiting for a breakout confirmation and accept a 1-2 or 1-2.5 or 1-1.5 or somewhat bit less win rate but the next reward.

Rayner (51:26)

Okay, and what about that stops?

Earlier you mentioned that your stops are really below the pattern boundary.

Am I right to say that it’s on the low of the breakout candle bar?

Aksel (51:36)

That also could be managed with an ATR.

So you may easily arrange a percent of ATR below the pattern boundary, after which your stop limit entry and the chance are predefined.

So you realize that ahead of time before you even enter the trade.

Rayner (51:59)

Okay, simply to make clear once you talk in regards to the pattern boundary, so as an instance…

We talk in regards to the rectangle, would the pattern boundary be referring to the resistance which is a breakout level point, or would it not be the low of the rectangle which is the near support?

Aksel (52:12)

No, the pattern boundary could be the breakout level on the upper side.

Rayner (52:14)

Okay, that is smart.

Aksel (52:15)

So we’re talking about a protracted trade here.

So that you defined your pattern boundary at 60.

So 60 is your pattern boundary and then you definitely calculate your ATR and as an instance 62 level is the ATR that you simply would act through the day, intraday.

So that you act on 62 after which the identical amount of ATR you remove from the pattern boundary you might have 58.

So 62 minus 58 is your risk of $4.

Rayner (52:52)

Okay, that is smart.

Then what about targets?

I feel from what I see in your Twitter feeds, your goal is normally price projection.

As an example the rectangle is between the lows is $50, the highs is $60, and your goal is normally $10.60 minus $50.

So is that sometimes the way you go about setting your targets?

Aksel (53:08)

Yeah, that is the depth of the pattern.

You’re taking it, that the majority of the patterns are the identical, but price targets are guidelines.

So the worth can exceed the pattern price objective.

Now what I even have

The service that I even have began with is classical chart patterns and pattern identification, one size doesn’t fit all.

So everybody has a distinct style.

Some people don’t use stop loss.

Some people use stop loss.

Some people take a look at weekly scale charts, and a few at each day scale charts.

I counsel people not to take a look at intraday charts since it’s too volatile and simply manipulated.

So each day and weekly scale, I attempt to focus, even sometimes on a monthly.

So what I even have done is I even have categorized breakouts.

I said, there are 4 forms of breakouts.

One, type one.

Stock breaks out and rallies to the worth goal with none pullback.

There’s a sort two breakout, stock breaks out, pulls back to the pattern boundary, after which rallies to the worth goal, price goal is met.

There’s a 3rd variety of breakout, which breaks out, pulls back to the pattern boundary, and dips below it.

Okay.

So now you might have this guy who

Uses a decent stop loss below the pattern boundary, and tries to maximise the risk-reward.

Okay.

This guy must give attention to the universe of type one and kind two.

In order that’s his playground.

That is actually what the final result he must expect from the breakouts and once I take a look at that, the sort one and kind two over the seven-year period, classical chart patterns that I even have analyzed, the success rate is at 47%.

So you may see that.

The success rate from 59.5 dropped to 47 percent, but only for many who are applying a decent stop, it will generate the sting because 47 percent with a one to a few risk reward is a successful strategy.

Now type three breakouts, once you take the sort three breakouts, which I’m assuming that if you might have a decent stop loss below the pattern boundary and price dips, you are stopped out.

Okay.

Those are out of the 59.5% success rate, those are the 12.5% are those. 12.5%.

Now, one thing I’ve realized is that this. Between type one and kind two, type one is 27% of the breakouts, type two is 20% of the breakouts.

What does that mean?

Meaning in case you are waiting for a pullback to enter, 27% of those breakouts you are missing out.

So the conclusion is that this, breakouts.

Ought to be acted on the time of the breakout.

To give you the option to capture probably the most rewarding ones what I’ve realized is type one breakouts which break out with none pullback and the worth to the worth goal are those that exceed the worth objective.

What does that bring us to?

So in case you calculate your risk reward, initially as three, one to a few, with the worth goal in focus.

You realize that it’s a sort one breakout.

How do you realize that it’s a sort one breakout?

The stock broke out and rallied to the worth objective without touching the worth objective.

We’re very close, like 2% away from the worth objective.

At that time, you realize that you simply’re riding the sort one breakout, okay?

So you’ve got already calculated one to a few.

Why not wait for one to 4 and one to 5?

There you capture probably the most out of a trend.

So once you realize that you simply’re riding a sort one breakout, my suggestion to all my members and followers is that, wait, trail it with a trailing stop because that is the winner.

That is gonna generate more on this uptrend, which is able to allow you to to attain higher risk-reward within the breakout signal.

So type one, type two.

So that is how I categorized the breakouts and this probably is my addition to the literature, as an instance — because once you read Schabacher’s book.

Schabacher mentions that the perfect breakouts happen on the time of the breakout, which tells us that we must always not wait for the retest I discovered that from the seven years of statistics once you wait for the retest, it is the 20%.

Once you don’t wait for the retest, that is 27% of the breakouts.

Then I spotted that in case you take a look at those forms of ones, they all the time exceed the worth objective since it’s logical.

The logic is that if a stock is rallying to the worth goal, it has momentum.

It should go.

It should easily go to, your initial calculation is one to a few risk rewards.

As an example…

It should go to 1 to 4 easily and that one to 4, really adds to the underside line.

Rayner (59:51)

That was informative, Aksel, I appreciate it.

You mentioned, as an instance type one breakout, you’d raise your goal further since there’s strong momentum, you go together with a trailing stop loss.

So how would you then, you realize, trail your stop loss as there are, I feel some ways to do it?

So I’d prefer to hear your approach to it.

Aksel (59:40)

Yeah, the trailing stop is the Chandelier exit.

It’s available online in every single place.

So it takes the…

What I’m taking a look at is the 10-period ATR, but this era could be modified, and the multiples could be modified.

So that you hang the chandelier exit, as an instance the trailing stop, from the high of that move.

So if a stock is making latest highs, it’ll hang it from that prime minus the multiple that you simply define times the ATR period.

As an example 10-period ATR you are taking. 10-period ATR means it has a glance back at 10 periods of true ranges.

They take the typical and provide you with these ATR values.

So that you say…

Okay, I’m gonna hang it 4 times the ATR, which offers you a wider stop or you may say I’ll hang it 3 ATR or 2 ATR.

This again, one size doesn’t fit all.

People need to take a seat down and work on it and see which they’re comfortable with.

How much of that open profit they’re willing to present back?

How their stock is performing relative to their ATR value.

How much of spikes are there in intraday or intra-week?

On that specific stock, if they’re going to apply it, for instance, within the crypto space, two volatile, they need probably five ATR to not get stopped out.

In the event that they’re going with a quiet, low-volatile stock, two, 2.5 ATRs could be applied.

So that you may adjust in accordance with, or you may say irrespective.

That is what I’ll use, three ATRs or 4 ATRs and I’m not gonna optimize it as per stock or instrument.

Rayner (1:01:56)

Alright and if I’m not flawed, you mentioned that breakouts there are differing kinds.

Did you say there have been 4 forms of breakout or was it three?

Aksel (1:02:00)

Yes, 4 forms of breakout, The fourth is a failure.

Oh, the fourth is a failure, so it is a false breakout?

Yeah, fourth breakout.

Okay, in order that one which one doesn’t even get better like the sort 3 after retesting after dipping below the pattern boundary.

So once it falls below the pattern boundary, it is a straightaway failure.

It just goes all the way down to the tip of the range.

Rayner (1:02:26)

Okay, so if that is the case, your stop loss, do you wait for the worth to form of like close below your stop price level, or is it more of like a touch, and then you definitely’re out of the trade?

Aksel (1:02:33)

Stop loss ought to be touched.

You can not wait for a detailed because there are every kind of adversarial movements out there and you can’t wait for a 20% down move at the tip of the day to exit a position.

So, stops should all the time be on the market in my view.

Rayner (01:02:52)

As an example assuming that you simply’re just going to go together with a traditional breakout, you realize, you might have your entry, your stops, and your goal, right, which is, you realize, you are pretty determined ahead of time.

As an example the trade starts to maneuver in your favor do you then form of like you realize micromanage those trades or it’s either going to be hitting your stop loss or your goal?

Aksel (01:03:18)

The statistics that I provide are its chart pattern price objectives because like I said if I apply 2 ATR, 3 ATR, which one is serving whom we do not know.

So I give a set of occurrences and that is how I divided them into type one, type two, and kind three, so people can get a feel of those numbers.

What I do is define a chart pattern negation level, not a stop loss, but a chart pattern negation.

For instance, with head and shoulders bottom, it is the low of the correct shoulder that negates the pattern, okay?

So as an instance we have now a head and shoulder top, the correct shoulder of the top and shoulder top is the pattern negation level, which is also the extent for a protracted signal for a head and shoulder failure.

So it really works perfectly.

So for ascending triangles, the law contained in the pattern boundary, the minor law contained in the pattern boundary is the chart pattern negation.

For a rectangle, it’s somewhat bit more subjective since it’s a flat area.

So I try to seek out a level, a minor low contained in the pattern that might act as a chart pattern negation level.

So the statistics that I even have compiled are either stocks which are reaching the chart pattern negation or they go to the pattern price goal.

That is smart.

Rayner (01:05:00)

Okay, that is smart.

I’m just considering through right, you realize once you said that you simply’re trading rectangles after which possibly it’s a sort 4 breakout where it is a failed breakout.

I’ll assume that that is a chart that you’re going to probably not trade for some time because at once your rectangle form of like looks a bit weird with a spike up and spike down or would you form of like redraw the triangle to take it under consideration that the majority recent high of the breakout, the false breakout?

Aksel (01:05:58)

No, I just moved to the following opportunity.

So even once I was managing funds you might have a mandate, a benchmark, so the universe is proscribed, okay, so if a stock is within the index and it had a failed breakout you reduce exposure.

But when it completes the pattern on the upside you might have to extend exposure because you can’t.

So you might have to, so that chance set was limiting. But for individual ideas that you might have a blank sheet, you might have a whole blank sheet to work on, you do not, you are not limited to that failed breakout.

Because once a faker, it’ll be again a faker in the longer term. So why not go together with a more clean opportunity?

Start from scratch. So I began avoiding the sort 3 breakouts, and re-entry strategies.

Though if you ought to capture it, I even have written about it and featured a re-entry strategy as well for many who are limited to a certain universe and wish to trade that stock, they should get in.

So a re-completion of the pattern could be your re-entry strategy.

These are the sort 3 breakouts, that is 12.5% of the breakouts.

Rayner (1:07:09)

So what are a number of the techniques that you simply use to reenter such type 3 breakouts?

Aksel (01:07:15)

Type 3 breakouts are people who penetrate the pattern boundary after which get better above the pattern boundary.

So if you might have applied the ATR, as an instance trailing ATR stops to enter, it might be the identical level.

So the stock breaches that pattern boundary.

With the identical percentage move or ATR move could be your reentry level.

Again, you’ll place the stop below the pattern boundary.

Rayner (1:07:47)

Got it.

So from what I’m hearing, as an instance…

You recognize, the worth breaks out, it comes back down. As an example probably the most recent high is at $60.

So if the worth exceeds $60 by a certain ATR margin, you may get long once more as a re-entry.

Is smart.

Got it.

Awesome.

So possibly now we will know, I feel that segment was very technical and I appreciate it.

Even, I learned a ton from that section.

But now I form of wish to move on possibly to a more macro perspective of trading.

So earlier you spoke about entering the tip of the week and end of the day, right?

So how do you choose, man, this chart pattern, I’ll trade it at the tip of the day, or this one shall be an end-of-week chart pattern?

Aksel (01:08:30)

How do you form of like settle on that?

It’s the size that you are looking at.

So in case you’re taking a look at a each day scale chart, it is vital to give attention to the end-of-day price motion.

For those who’re taking a look at a weekly scale price chart, it is the end-of-week price motion.

For instance, gold, two charts, I future weekly and monthly and that is the month and March was the primary time that it’s closed strongly above the pattern boundary.

However the weekly signal got here in March.

So the primary week of March, if I’m not mistaken, was the weekly breakout signal.

It was a powerful weekly candle.

So in case you’re looking and trading the weekly scale price motion, it’s best to have acted at the tip of that week.

But from a really long-term asset allocation perspective, you may easily wait for that monthly close and position yourself accordingly.

Okay, so one in every of the things that I used to be doing was mostly specializing in the weekly scale charts once I was managing the funds.

The rationale for that’s turnover.

You can not carry on acting on a each day after which if it fails, exit after which enter again.

So we were being punished by high turnover.

Due diligence that was being done by investors was mainly asking in regards to the turnover. So if you might have high turnover, entry and exit.

It will not be considered to be good A minimum of for our mandate.

It was not considered to be good.

So I used to attend for a weekly signal and the Weekly signal was my confirmation as I used to be waiting for the weekly signal you can’t act on a Friday in The UAE it was Thursday’s end of the week.

You can not act on a Friday because the scale of the fund doesn’t assist you to enter with that size at the tip of the week.

So you might have to scale in from Thursday or the day before if it becomes clear that it’s a breakout.

It’s way above the boundary.

So that you spread your positioning into two days to a few days and even two days plus Monday.

So I used to be taking a look at the weekly signals to have more conviction that it is a confirmed breakout.

That can also fail. There isn’t any guarantee.

But no less than you aren’t getting whip-sawed with each day scale charts, let alone intraday.

So it’s the size that you are looking at.

The each day scale focuses on the tip of the day.

The weekly scale shall be the tip of the week closing.

Rayner (1:11:41)

You mentioned that you simply couldn’t enter all on a Friday, is it because the scale of your fund is just too big and in case you entered one position on just sooner or later, you’d form of like move the market, is that why?

Aksel (1:11:49)

Yeah, yeah. I used to be, the scale, the scale was mainly could lock the stock limit up in that day, one position size.

Rayner (1:12:06)

Oh, that is crazy. {Laughs}

So yeah, I do know that you simply scan many markets for opportunities from what I’m seeing at once. Crypto, Forex, commodities, etc.

How do you go about scanning so many markets for any such different breakup opportunities?

Aksel (1:12:22)

I feel, on condition that we have discussed the military service days, except the military service days, which was around six months, I do not think there was a day that I have not opened my Metastock charting platform.

I do not think there was a day, even once I’m sick, it’s like I feel blind if I’m not taking a look at charts.

So for instance, on social media or Bloomberg, otherwise you hear, you see those charts, the news, the dollar is breaking out.

Then I even have to open that dollar chart.

What’s breaking now?

Then I spotted that they were talking about an intraday price motion.

Nothing is going on actually.

So each day, I’m in front of my charting platform for no less than two hours and doubtless I developed this capability because once you undergo thousands and thousands of charts over, since 2000.

Say 24 years now probably thousands and thousands of charts have piled up on this so once you undergo those charts you develop this pattern recognition capability.

I’ve seen it interestingly enough once I visit a city I go through a street coffee shop after which I see that coffee shop or that street on a TV.

I said…We have been here, it was this.

In order that interesting pattern recognition development happened in my brain probably over time.

After I take a look at the chart, I immediately give attention to the correct side and I do know what I’m in search of.

I do know the qualities that I’m in search of.

In order that helps me to cut back the time.

That I scroll through a chart.

Perhaps one second to 2 seconds is the time that I spend on a price chart.

I am going through the list in a short time.

So as an instance two to a few hours per day is my review process.

Sometimes it exceeds, but I do not understand it.

So in case you benefit from the process, even when it’s 4 or five hours, it might probably feel like two hours.

Rayner (1:15:04)

That is dedication, man.

So, like, I mean, I’m just curious to listen to what’s your watchlist like.

Do you want to begin with like all of the stocks that start with capital A, then go all the way down to BCDEFG to Z?

Is that the way you undergo the person charts or stocks?

Aksel (1:15:21)

The platform that I’m using MetaStock has develop into increasingly more organized through the years.

I like their platform.

In order that they have a drop-down menu for every market so Nasdaq 3000 names Latest York Stock Exchange 4000 names.

They’ve hang sang index 40 names CAC 40 names so I added all of them into a listing and divided them into Asia, Europe, America’s Middle East, and Africa.

In order that’s a gaggle of stocks.

Straight away, in my, for my timing, it’s 11:16 in two hours, and Asia will close.

Asia will include Japan, Hong Kong, Singapore, Australia, and Latest Zealand stocks, uh, stocks which are above a market cap of $500 million.

Uh, that is my filtering.

So I’m going to take a seat down and spend a very good one and a half hours, two hours to undergo those quickly.

With my timing around seven o’clock, which is after my time for dinner, Europe closes.

So I am going through Europe and the Middle East, Africa stocks.

Then at the tip of the day, around my time, 11:15, 11 o’clock US closes.

US is a bigger universe and I don’t need to remain too long.

So what I do is I attempt to go half of the US list around 11 after which the following morning I proceed once I get up mainly from 6.30 6 o’clock till 8 o’clock I do my US studies as well.

In order that’s how I manage the review process.

These are each day, every single day I do that and at the tip of the week, on weekends, I do the identical for weekly scale charts.

No end of the month.

I’m not doing that.

For weeklies, I’m doing the weekly as well.

Rayner (1:17:48)

So easily like every day is like hundreds of charts every day. Every day you are just going through.

Aksel (1:17:49)

Yeah.

Rayner (1:17:50)

So if like you’re taking two seconds for a chart, you undergo a thousand charts, you realize, it’s like you may do the maths, right?

How much time do you spend?

Yeah.

It isn’t going to be two seconds because you’re taking time to go from one chart to some possibly some delay from the platform and stuff like that.

Wow. Wow.

All I can say is wow {Laughs}

Okay so my next query was about to ask, what’s your tackle trading pullback?

I feel you talked about that earlier, in case you wait for a pullback you are going to miss the move 27% of the time especially if it’s a sort 1 breakout.

So I feel I’ll skip that query unless you might have something so as to add about that.

Do you might have anything so as to add about you realize?

Aksel (1:18:20)

Yeah, I feel pullbacks if it’s a part of your strategy okay you might have to know that no less than from my statistics being a retest and rallying.

So that is your universe and in case you’re in a position to manage the risk-reward since it’s gonna provide you with a greater entry, right?

When you might have a pullback.

It is also difficult to time the place where the pullback is gonna stop.

Sometimes the pullback is brief.

Sometimes it involves the pattern boundary.

In order that waiting or that not getting filled and that trade is, uh, it’s stuffed with regrets.

I wish I put it here.

I wish I put my entry here.

So where do you exactly put that entry?

So waiting for that pullback, I felt, I feel prefer it’s plenty of regrets.

The regrets are painful.

You do not need to have regrets.

You need to flow execute that strategy and accept the result.

Rayner (1:19:37)

Since you realize, you take a look at hundreds of charts every day, I’m pretty sure multiple trading opportunity might come up.

Perhaps they’re each like, you realize, rectangle patterns.

So how do you then determine which trade you ought to take?

Aksel (1:19:50)

It is the rectangles mainly after which there the list drops down because the chance is what news event is pending.

I prefer to see breakouts that happen with none news effect.

So as an instance the stock has an earning announcement in the following two, or three days and the stock is breaking out.

I’d reasonably skip that because there shall be plenty of volatility news announcements hitting the market.  

I prefer to go together with those breakouts that don’t have any events around them.

So either corporate actions or news announcements, so the list drops down.

In order that’s how I filter and mainly give attention to the rectangles.

For shorter-term trading, the perfect are from two months to 4 to 5 months consolidations.

For the long term, I prefer to take the weekly signals on weekly charts, that are year-long to 2 years long.

These are the longer-term patterns in that you may have wider stops and let go, giving room for that concept to develop.

But for a shorter term, you furthermore mght have this filtering that comes from two months to 4 to 5 months breakouts.

The tighter the range, the higher it’s.

The worth of that range ought to be ideally 10 to fifteen percent of the worth.

When those opportunities arise those are the upper conviction setups.

Rayner (1:22:12)

So once you said the range ought to be 10 to fifteen percent of the worth, let’s form of like make things easy.

As an example the stock price is at $100, so the range ought to be anywhere between $85 to $100.

Aksel (1:22:21)

Exactly.

Rayner (1:22:24)

That form of range, right? Exactly.

Because anything white, then the range gets ridiculously large.

Yeah. Okay.

Is smart.

Okay.

What’s your tackle the concept of relative strength?

Is that this something that you simply listen to?

Aksel (1:22:34) 

Relative strength, yes, I listen to.

I listen to and with my work with a number of the funds for which I do consultancy, I also help them with relative performance charts.

Relative performance charts are priceless and Interestingly enough chart patents form on them as well, but you mustn’t exaggerate the Number of the charts.

It’s again rectangles and a few short flag consolidations that you may act on or else trying to seek out exotic chart patterns on relative performance is somewhat bit overstretched.

So what I used to do is on the time of management of the funds, I had the denominator because the index, MSCI UAE index.

So all stocks relative to the benchmark I needed to undergo to see which stocks are outperforming the benchmark, and which stocks are underperforming.

So you can’t go against the tide.

It’s the larger picture.

So as an instance at once you take a look at Nasdaq versus Russell, Nasdaq is outperforming.

So the tech stocks are where the motion is going on.

So it’s possibly higher in case you’re a top-down guy, you could be taking a look at the tech stocks versus the Russell names.

So relative performance is vital and it will probably be utilized in several strategies as well I enjoy taking a look at them because they’re pure price charts.

It’s just like the Euro versus the dollar, Microsoft versus Tesla. It’s the identical idea.

The identical patterns can form the way in which an FX chart is forming.

Rayner (1:24:41)

Would you then prefer to use that and consider that as a part of your trading?

For instance, you notice form of particular commodities A and B right?

They’re each commodities.

Perhaps A Commodity A, the relative strength is stronger in comparison with commodity B and possibly commodity B has a possible rectangle breakout happening as well and possibly for commodity A, the breakout has already occurred.

So would you think about buying the breakout on commodity B, knowing that by way of relative strength, it isn’t as strong in comparison with commodity A?

Does that make sense?

Aksel (1:25:14)

Yeah, if I used to be applying a distinct strategy, I’d have.

But at this point, it is just too time-consuming to include different tools and inputs into my decision-making.

Because I’m a pure momentum-based breakout strategy guy.

So for me in a gaggle, as an instance, I’m taking a look at European banks these days, the European banks are the great move.

As an example I spot 10 different European banks, okay?

For me, a very powerful signal is the primary signal.

The one which breaks out first, shall be the strongest.

So I go together with that.

I do not wait simply because HSBC has higher fundamentals.

I do not wait for HSBC to interrupt out when ING is breaking out or Unicredit is breaking out.

The breakout signal matters probably the most for me and once I’m taking a look at those European banks, just doing relative performance between each one in every of them is super time-consuming, but it will probably be done.

I’ve done it previously.

I’m still helping some funds with the consultancy to take a look at relative performance and I can say that it’s a vital component that you may think about to capture longer-term or barely longer-term movements between stocks, which one to prefer.

Rayner (1:27:05)

But for yourself, because to maintain things easy, you only simply go along the primary breakout and just keep things easy because it is.

Aksel (1:27:11)

Yeah.

Rayner (1:27:12)

So I feel one other thing that from what I’ve gathered is that you simply love trading rectangles and in addition you take a look at the 200 period moving average to form of define the long-term trend.

So price is above the 200 MA, the trend is up, and you purchase the rectangle, that is good. So what about… So am I right then to say that…

The stock market often is more in a long-term uptrend, it’s more bullish than bearish.

So most of your trades, I assume, are more long than short.

Aksel (1:27:41)

Yeah, yeah.

Long ideas are probably 80% of all of the signals thus far.

We had two different years, 2018 and 2020 during COVID, when markets tanked and when there was a V reversal, I failed badly.

Okay, I’m not in a position to capture V reversals because I’m not a bottom picker.

I prefer to see stocks rebound, form some form of a base, after which start a latest trend.

So at that part, I’m lost.

What I do is I try to right away take a look at other opportunities that may give me the upside when the markets are having a V reversal.

So mainly…

The 200-day moving average, the 200-day moving average could be very helpful in identifying those.

So in 2018 and 2020, the MSCI All Country World Index, which is the benchmark that I’m taking a look at gives me the general perspective for global equities because I’m also taking a look at emerging market stocks.

Sometimes there are some frontier equities that I future.

So the MSAL Country World Index, with its 200-day moving average, when it falls below the 200-day average, and the market crashes or collapses, you begin seeing bearish chart patterns.

I used to be in a position to capture possibly 10 to fifteen% of the ideas as bearish setups.

But mostly it has been bullish setups and I can say 80% were long ideas from the classical chart patterns.

But that doesn’t suggest that if stock markets enter right into a bear market and stay in a bear market next five to 6 years, we’re not going to see bearish chart patterns.

Quite the opposite, there shall be bearish chart patterns developing.

You simply need a longtime trend to see increasingly more at the tip of the day are usually not magic, are usually not voodoo, or they’re consolidation periods, okay?

So when stocks consolidate, they form one in every of those patterns.

It’s either a rectangle or ascending triangle or head and shoulder continuation and so they all tell the identical thing.

After this consolidation, a trend might develop and your job is to capture that trend to give you the option to capture that trend, you first must discover the consolidation.

For those who do not know what the stage of the market is, you is not going to give you the option to define the trend period or the next trend period.

So chart pattern helps us to discover that consolidation period.

It’s just giving it a reputation.

Rayner (1:31:09)

So I’ll backtrack somewhat bit here and possibly speak about consolidation rectangles.

So I need to understand how do you draw these boundaries.

Because not all the time the chart, the worth will just the precise sense, rebound.

Sometimes it’d exceed, and sometimes it may not even touch that level.

So how do you then connect the dots?

How do you draw that horizontal line in your chart?

What’s your approach?

Aksel (1:31:30)

It’s somewhat bit harder than a science.

I’m applying the best-fit principle and attempting to touch as many points as possible on the worth chart and get close as much as possible to that minor high or minor low.

In order that’s how I’m drawing the boundaries.

Rayner (1:31:58)

Am I right to say that there shall be times when if the boundary is not as needed to jot down the word need as you want you only ignore it and move on to the following…

Aksel (1:32:08)

Ignore ignore yes ignore and move.

Rayner (1:32:09)

Okay

Aksel (1:32:09)

I’m not certain with uh with that specific opportunity that is the that is the nice part about uh having a large universe and a blank sheet.

Rayner (1:32:23)

Yeah, that is the advantage of taking a look at hundreds of charts every day. {Laughs}

Aksel (1:32:24)

Yeah, you may you may take a look at one other opportunity that has the right boundary and act on that.

Rayner (1:32:33) 

 Okay, and possibly to the touch on risk management, how do you then manage your risk?

I feel earlier you talked about setting stops and targets, but possibly by way of percentage risks or possibly having a portfolio of 10, or 20 stocks, is there like a limit, a cap to what number of stocks or positions you may be in at anyone cut-off date?

Aksel (1:32:50)

Well, with the short-term strategy that I’m applying for my very own, a maximum of 5 to 6 with 1% of AUM in danger.

This does not imply six of them stay open.

A few of them reach price targets, a few of them get triggered and you might have to get out.

But mostly not greater than six open ideas at a time, which puts you around 4 to five% value in danger.

At any cut-off date.

Rayner (1:33:36)

So if the worst thing happens, just boom, right?

5% max loss, that is it.

Aksel (1:33:40)

Sometimes not exactly because some stocks open with a spot down, but in addition there are gap-up openings as well.

So low or large numbers deal with it over the long-term that bad things can occur, but good things can occur as well on the upside where you have not measured.

That is presented to you want the way in which a spot down happens nevertheless it nets out with lots of of ideas.

Rayner (1:34:18)

Based in your possibly experience or data that you might have, do you discover that within the stocks that you simply hold, the gap up, occurs more often than the gap down?

Because you’re trading the direction of the trend?

Aksel (1:34:28)

I feel experience over 4 or five years, I’d say equal amount of times I’ve experienced.

I’ve experienced some nice surprises on the upside and a few nasty surprises on the downside as well.

Rayner (1:34:53)

When the market is open, so I’m guessing your stops, you then would put the stops along with your brokerage or is it more of a mental stop once the goal is reached?

No, no, it is usually on the market.

The stops should be all the time available on the market.

Okay, got it.

Perhaps just to maneuver on and talk somewhat bit about crypto, right, since you do share quite a couple of crypto charts.

What’s your take?

The crypto markets possibly typically?

Aksel (1:35:18)

Crypto markets are interesting.

So many tickers on the market.

Rayner (1:35:29)

Yes.

Aksel (1:35:29)

It’s like stocks that go on IPO and corporations eventually, go bankrupt, and so they get delisted.

I even have so many tickers that got delisted within the crypto space.

So, It’s one other instrument of speculation.

That is what I’m seeing.

Some are gonna survive and develop into a de-think, which is gonna be a part of the next-gen, probably currency or the financial medium that we get entangled in.

But most of them are going to be just the periphery speculation instrument.

That is how I’m seeing it.

But what crypto created is quick access for the final crowd to 1, open an account.

Opening an account is super easy, right?

With the camera recognition, you are in a position to open an account deposit money, and trade cryptos.

The second is that it allowed the group to get entangled in financial instruments and have the opportunity of earning money or losing money.

Today you can’t even open a checking account in that short period, which is a far more established institution or a brokerage account.

You may have to undergo so many due diligence and checks and so forth.

So its quick access helps it spread widely and fast as well.

After I share a crypto chart It gets 10-15 times more likes in social media than a stock chart and a stock chart will not be an easy stock chart.

It’s sometimes Tesla, but a FET US dollar crypto chart is getting 300 likes versus a Tesla with 100 likes.

The involvement in crypto is huge.

That is what I’m seeing at once.

Rayner (1:38:09)

Because crypto is sort of a latest market in comparison with established markets just like the S&P, and Nasdaq.

So do you discover that perhaps breakouts in these markets are likely to be more reliable in that sense?

Aksel (1:38:20)

Yes, it’s momentum-driven, less fundamentals.

It jogs my memory of my early days within the UAE, where firms weren’t publishing financial statements every quarter.

You used to attend, there have been delays, and so forth.

So even the basic fund managers needed to depend on technical signals to administer certain positions.

So fundamental information was limited.

So it was mostly momentum-driven and psychology-driven.

Within the crypto market, I’m seeing it similar.

Except probably Bitcoin or ETH which has a story.

Yeah.

So mostly it’s, it’s momentum driven.

I’m seeing, and the share moves also show that per day.

Rayner (1:39:27)

I used to be just considering too, so earlier you talked about your short-term trading, at most you hold I feel six positions, but I forgot to ask, what about your long-term trading or investments?

How do you then manage your risk in that aspect?

Aksel (1:39:38)

Long-term I prefer to go together with more illiquid assets.

I’m diversifying my assets into gold, real estate, and a bigger portfolio of passive income-generating assets.

So the trading side will not be an enormous part, but simply enough to generate some return, and other parts are more tied to passive income-generating assets. I even have had some success over the past couple of years in real estate.

It’s probably interesting that a stock trader or someone who has managed funds that have not held the assets physically is in search of more physical assets to balance his portfolio.

So I just like the physical aspect of things.

To see the actual estate, to see its presence.

Rayner (1:41:08)

Let’s speak about real estate then, right?

So is it like real estate, where do you invest?

Is it areas of your expertise overseas, local, etc?

Aksel (1:41:17)

Real estate is the place where I live mainly.

I never take a look at real estate as an investment, but more like would I wanna live on this place?

That is my initial motivation.

I’ve realized that over the past six, or seven years, the actual estate that I got involved in Bulgaria, Eastern European market, some in Greece as well, which is a closed market, each have been in resorts.

So very much tied to the economy and the economy is booming.

For those who take a look at the stocks of Airbnb, booking.com, travel firms, and leisure firms, their stocks are booming.

So the economy is booming.

There’s inflation and people assets have tripled and price over the past 4 to 5 years from the time that I got involved.

Keep in mind they are not big-ticket purchases so I’ve realized that smaller units are more in demand because today’s family structures have 4 or five-bedroom places versus they’re completely happy with a small family, two-bedroom, one-bedroom units, and houses.

So those assets have picked up more, I feel like in price versus large properties.

That is my experience on this region.

Rayner (1:43:36)

So from what I’m hearing, you realize, you’d wish to buy real estate places that you ought to live in and ideally form of just like the smaller size units, right?

Due to family structure.

Aksel (1:43:45)

Yeah. I prefer to see, I prefer to feel the market because I do not, I don’t need to go and put money into Hong Kong at once.

Okay. Real estate, which I don’t know about.

What I’m seeing, I’m comfortable with.

I need to breathe that market’s momentum.

I need to see the infrastructure improvements and the developments which are happening in that place.

You go on vacation, you go see the improvements and you might have a sense of the place.

So those are the places that I feel comfortable placing my investments.

Rayner (1:44:28)

Is it an identical philosophy as breakout trading?

You need to see momentum occurring around that place before you form of like…

Aksel (1:44:34)

Looks like, yeah.

Type of. Okay.

You need to see the confirmation.

You need to see…

Rayner (1:44:43)

So you are not a lot of an individual of like, as an instance…

“Oh, there is a financial crisis, you realize, real estate prices are low, let’s go in and buy some stuff”

You are not form of value investing per se, but more of like, you realize, while things are doing well, let’s get in at this, you realize, price when things are looking good.

Aksel (1:44:56)

Uh, yeah form of but in addition let’s be fair because uh, I got lucky with uh with a few of my uh Investments here in Bulgaria uh I I saw the chance, and uh, this probably is due to the places that I have been to that I lived in other places.

I’ve seen that there’s a possibility that folks are usually not seeing it.

Uh, and, uh, it ended up being the underside.

Hmm. Um, in order that no person wanted to the touch right before COVID and COVID even, uh, made things more exciting because, uh, the place that I’m at once is away from cities.

So people rushed out of cities to the suburbs and other people began valuing life outside of cities, which gave them more freedom.

The house office concept also helped to push the costs of suburban living.

Rayner (1:46:26)

So now that prices are like, you realize, higher in comparison with where you purchased them, do you might have plans to exit those long-term trades or is it form of like proceed holding?

Aksel (1:46:35)

I feel proceed holding because they’re generating passive income and it is often good to have passive income-generating assets in your holdings.

They pay the bills and keep you comfortable whilst you’re trading.

In order that’s it.

Straight away I do not have plans to sell prices are really low in Bulgaria, especially on this a part of the country.

I do not understand how things were in Singapore or Asia, but for instance, in Dubai, we’re talking about prices of $2,500 to $3,000 per square meter.

We were at 300 euro per square meter here and now prices have picked as much as 1100 euro per square meter and there’s probably potential of it going to 1500, 1600 euro per square meter.

It may easily go there because people start valuing quality of life otherwise.

As businesses, because the concept of companies change, becoming increasingly more online, education is becoming increasingly more online people are usually not tied to cities anymore.

In order that they want the fresh air, they need the recreational activities.

So I feel like increasingly more outside of cities are gonna profit from this.

Change of trends in AI and the way we work.

How we work and the way we study.

Rayner (1:48:48)

A really similar phenomenon has happened in Singapore as well.

I feel COVID, we thought housing property prices would drop, but such as you said… more people do business from home, distant working.

Prices here actually soared to pretty high now.

So I feel we talked about per square feet, you realize, private properties about $1,000 per square feet.

I’m undecided what the conversion to a square meter, but a typical property here, a thousand square feet house you may expect to pay from you realize between 4 hundred thousand to 1,000,000 dollars and this public housing will not be even private.

Private you are looking at seven figures and beyond over here so it’s pretty crazy over here yeah.

Aksel (1:49:27)

Yeah I mean during an inflationary time that is an asset that is holding its value and increasing its value so it’s it’s by default that okay there’s the dollar’s inner value of the paper currencies are taking place, so the assets are holding its value.

Rayner (1:49:55)

So is that the identical reason why you purchased gold, you mentioned gold as well.

Aksel (1:50:50)

Yes, yes.

Those are the identical reasons that I desired to go into hard assets due to the value of the losing value of the currencies.

Rayner (1:50:19)

Yeah, the declining purchasing power.

Aksel (1:50:20)

Declining purchasing power.

Yeah.

Especially I saw the chart of- What you were buying, you are not in a position to fill your basket in a store with what you were paying two years ago.

No way.

Rayner (1:50:36)

I feel you posted the chart of the dollar against the Turkish lira a couple of times.

It’s crazy.

That is- That is ridiculous.

Aksel (1:50:39)

Unlucky, very unlucky.

Rayner (1:50:40)

What about Bitcoin, I’m curious since Bitcoin is form of like a digital goal in that sense.

Is that this something that you simply hold as well?

Aksel (1:50:51)

Cryptocurrencies are an interesting field.

It has its regulations.

So with the truly regulated instruments, I prefer to get entangled, which is being available now increasingly more.

So so long as it’s regulated, given the countries that we’re living in in every single place have their regulations and limitations, still the institutional system will not be super comfortable with the instrument itself.

They’ll develop into more comfortable with regulatory leeways and allowances in several countries, I assume.

Rayner (1:51:51)

I understand.

Now let’s move on to the closing section, we could?

I’d prefer to hear possibly more about TechCharts, which is the tutorial company that you simply founded.

Aksel (1:51:01)

Yeah, so TechCharts began in 2016 as an academic service.

So what I even have taught is that I even have developed this ability to take a look at charts cleanly and I spotted that so many people who find themselves starting in technical evaluation and charting have the opportunity of losing a few years the way in which I did.

Moving from one concept to a different, hoping of relying on a distinct strategy, taking a look at things otherwise, and determining.

So I said — I can easily help people to shortcut no less than two to a few years of their journey and begin with a clean perspective of what’s working most of the time.

That was my initial motivation because I worked with so many fundamental guys and I feel that through the years that I worked with them, I’ve modified their perspective towards classical charting and charting itself.

So a fundamental colleague of mine would sit in front of a Bloomberg screen with all of the codes, and tickers, after which he would have a each day chart open on a portfolio that he’s managing and rebalancing every quarter.

So I used to say, why are you taking a look at the each day chart?

You have to be taking a look at a weekly chart for this stock, what it’s doing and I explained to them the trend periods and the consolidations, probably the most basic sense.

I spotted that there’s plenty of awakening happening there.

I feel with this service, I helped many individuals to have that awakening and to maneuver faster to the following stage of their journey where they will start applying the chance management and psychology of things and learn trading by applying it, by doing it.

Because I even have a belief that you simply cannot teach trading.

You may educate a physician, you may educate an engineer, but that person must exit and experience it themselves.

An excellent famous doctor and an odd doctor, the difference is that it is the same as an excellent trader and an odd trader.

There’ll all the time be this difference. You, even the Turtle traders got the foundations and the right way to apply them, but every one in every of them ended up different.

So it’s that second a part of that journey that they will start specializing in by accelerating this trial and error within the charting part that I need to assist.

 I feel it has been helpful for many individuals.

Meanwhile Uh, let’s not forget I’m cooking food and I’m serving it so the ideas that I’m generating.

There could be 20-25 ideas and I would utilize five of them but 15 of them are going to go to the rubbish or profit a number of the members.

So I made a decision that I could put out those ideas that I even have came upon as a part of the membership service.

So there’s the tutorial part and the applying part, the signaling a part of the service that has been helpful to many who do not have the time to undergo those charts every single day to place that two hours overtime or three hours overtime.

So I feel it has been a win-win.

It keeps me more focused and disciplined once I write things once I compile things together, I stay more focused. It helps me to arrange myself.

It helps the members also to get something in return where first they shorten their time of research, second, they shorten their time of journey in reading charts and becoming more able to taking a look at things.

Entered by By giving them these educational videos educational points of things or how things worked previously and the way things can move in the longer term plenty of people think that with the event of the financial markets Classical charting stopped working.

But once I put a chart from the Nineteen Forties Edwards and McGee and put a chart from the crypto market today, it’s shocking to see that.

They follow the identical pattern in totally different markets for nearly 60 years, 70 years, or perhaps a century-long chart having the identical pattern as today.

In order that’s like awakening for plenty of people.

It makes them more desirous about researching the sector, which I feel I have been in a position to achieve thus far.

Rayner (1:58:14)

Would you say then since breakouts are likely to work higher in lesser popular names, less liquid markets, so chart patterns or classical chart patterns typically, would you discover higher opportunities within the more obscure markets, in comparison with those that are very, that plenty of people listen to.

So I assume for a latest trader who possibly wants to seek out a greater probability of success, give attention to these obscure markets reasonably than the very fashionable ones.

I would not say that because like I said, for instance, on Microsoft, you would possibly not find that perfect rectangle forming every other month or in a 12 months, 3 times or 4 times in a 12 months.

But once in a 12 months, you would possibly find it in a really crowded stock like that.

But in less focused names you would possibly find that arrange more regularly.

That is what I can say because I’ve seen very liquid names having perfect chart patterns.

This does not imply they do not form in any respect but they’re less frequent to return across.

They’re probably more just like the pattern boundaries might be more violated than a less crowded stock.

Rayner (1:59:35)

Okay, so simply to make clear, once you speak about frequency, possibly as an instance — A very fashionable stock, possibly over five years, that tradable pattern might occur one time, whereas not so popular stock over five years that tradable pattern might appear possibly 5 – 6 times.

Is that what you mean by the frequency?

Aksel (1:59:51)

Exactly.

Yeah.

Rayner (1:59:52)

Got it.

Okay.

Aksel (1:59:53)

But then you definitely can go and take that Microsoft after which take that Tesla, take that ExxonMobil, take the opposite name, after which increase those patterns forming.

So you continue to have that option.

That is why I all the time advise you to widen your research universe.

Don’t take a look at just Facebook.

Don’t take a look at only a Tesla name.

Have a look at a wider universe.

Go somewhat bit more outside of the same old names to give you the option to seek out more of those setups.

Rayner (2:00:31)

That is smart.

Also, I feel in your website, I saw that there’s this sort of like a tagline that claims that…In association with the factor trading, which is, you realize, from Peter Brandt.

In order that’s form of just like the arrangement or the link down there?

Aksel (2:00:47)

So the link is that Peter has been a mentor. In 2011, I read his Diary of a Skilled Commodity Trader.

Principally, in 2007, I began applying the classical charting principles to the UAE markets after which I began seeing the success then in 2011 I began reading Peter’s book and who has been applying it to the commodity markets and all of it clicked.

We interacted after which I joined his trader’s boot camp in 2014

We began considering of doing this larger library of classical chart patterns together.

So all this data that goes into this database that I’m creating about classical chart patterns will hopefully develop into a part of an even bigger thing in the longer term and a part of a go-to source in classical charting.

So mainly in 2016 once we launched this TechCharts membership service, our motivation was to give attention to equities and check out to gather as many data points as possible that we will study in the longer term and even apply different risk management to it to see what can come out of it.

So that is our association with him, working on this together and making it a much larger classical chart pattern library.

Rayner (2:02:47)

Okay, got it.

Is there anything right that you simply wish so as to add or speak about that we didn’t cover in today’s session?

Aksel (2:02:57)

Concerning the chart patterns, I need to debate them because we have touched on rectangles.

Our brains have the aptitude of checking out limited patterns in a single shot.

For those who force yourself on as an instance one stock to seek out eight or ten different chart patterns, you shall be mistaken, you shall be misled, and find things that do not exist.

So I need to shut this podcast session by giving a fast tip for people who find themselves starting their journey to limit the variety of patterns that they are in search of and increase the variety of instruments.

So as an instance they give attention to two to a few patterns.

As an example a rectangle or cup with a handle.

This cup with a handle is the most well-liked these days due to the volatility contraction pattern that has been discussed in several books.

So as an instance you take a look at a rectangle and cup with a handle, but take a look at a thousand names.

That cup with handle even limit.

The period that you simply’re in search of, like as an instance 4 to 5 months of cup pretend.

Yes, the opportunities shall be limited, but you will see, that your eye will start in search of that pattern always, and you may give you the option to seek out the patterns which are valid on the worth chart.

Moderately than opening one chart and attempting to focus and say…

Is there a symmetrical triangle?

Is there a wedge here?

Is there a trend line here?

Is there a head and shoulder?

The list goes on and it becomes confusing and the perfect actually, what I discovered is to limit the patterns because we cannot process that much information at one look.

Rayner (2:05:22)

This type of jogs my memory of a… I’m undecided what is the exact term nevertheless it’s something along the lines of the reticular activation system where your brain starts to get very accustomed to the pattern that you simply are seeing after which it form of triggers every time such patterns appear.

It’s form of like muscle, you might have to maintain training it to develop that system, yeah?

Which is what you’ve got done through the years, right?

Hundreds of charges stay every day and now every time you see a pattern, you realize, that is it, right?

If not, you progress on to something else.

Aksel (2:05:47)

Yeah, I even suggest people print out the patterns that they’ve traded successfully.

That may be a textbook rectangle, textbook head, and shoulder, and print it and post it on their desktop and regulate that.

Control that to see if what they’re taking a look at resembles the identical pattern.

Be it the period, be it the depth.

Soon, artificial intelligence software will give you the option to capture those.

I’m 100% sure that we’re getting into that direction.

But until that happens, we’re still alone on this means of finding the patterns that we would like to trade and act on them.

Rayner (2:06:38)

Awesome and where can traders find you, right?

In the event that they wish to connect with you.

Aksel (2:06:43)

I’m on Twitter, TechCharts, online I’m on TechCharts.net and YouTube videos are also available with the TechCharts extension.

So in the event that they go to my Twitter profile or X profile TechCharts, they’ll give you the option to see the links for YouTube and my website as well.

Rayner (2:07:13)

I highly recommend right, traders achieve this because your Twitter feed has one in every of the cleanest right classical chart pattern feeds that I’ve come across.

So you realize, traders should check your Twitter feed or X feed out.

Yes.

So thanks a lot on your time, Aksel.

I appreciate it.

It has been a incredible session, right?

Speaking with you.

Aksel (2:07:30)

Thanks, Rayner.

Same here.

I appreciate having me in your show.