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Welcome back folks.

This is less than five oh January, 2017, 19 mentorship.

I'm going to be discussing money management in higher timeframe now.

Okay, we're going to be just talking about a broad brush

perspective on this view of trading.

In other words, long-term analysis.

Um, we're going to assume for a moment that, uh, everyone that's learning the

concepts for January is contemplating, uh, the medium of long-term.

Or position trading.

Now that may not be your cup of tea, that may not be the discipline or trading that

you are going to adopt as your career.

But I would advise you to at least work in this timeframe a little while, at

least try to work it at least for a year.

And the reason why I say that is because some of you may not be.

Uh, contemplating managed funds.

In other words, managing other people's money or working for a

firm, maybe working for a prop firm.

And while you may not have a large equity base to start with.

Um, it's not important now, but what is important is growing your

understanding over a long period of time.

And when, I mean getting experience in the marketplace, there's no better experience

than actually applying the things you've practiced in a demo account with

positive results and then segwaying into.

Live setting where you're using life funds.

It's not important that you have a big account, uh, because what you're focusing

on is the control over draw down, keeping it manageable, keeping it a tolerable.

What's a tolerable level of draw down.

I think I'd say about, uh, 15% annually is, uh, a realistic objective.

Um, most folks would, uh, would start to cringe over twenty-five percent or so.

Um, but if you can keep track, you can control your draw down

to around 15% as a maximum.

That's absolutely amazing.

Uh, but twenties it's probably.

Okay.

And if he can still maintain a positive outcome for the annual return, but.

Thinking about managed funds.

I want you to think about the possibility that while you may be thinking about

only managing your own individual assets and moving your, uh, your wealth

forward independently, apart from using anybody else's money, uh, for some of

you that may not be the case, maybe you came into this mentorship with every

expectation of learning to do that.

Very thing.

Uh, we, well, it starts here.

You have to have a.

Realistic expectation coming in and knowing that you don't

need a whole lot of money.

If you can show a consistent equity curve, that's improving very little draw down.

Very.

Um, infrequent, uh, erratic or slow periods in your trading.

Uh, that is very good for, uh, for investors when they see things like that.

Um, and it doesn't have to be high rates of return, but having a steady increase of

over a calendar year that really attracts investors, uh there's you have no idea

how much money is sitting out there.

Just waiting for people to say, Hey, look, you know, I'll, I'll

take that money and control it.

And turn a profit.

Now you also don't need to use the entire equity base that you start with, um,

many times $10,000 trading account, and they assume that they have to maximize

every possible dollar in that account to get a respectable rate of return.

And I don't teach that.

I actually have a very conservative approach.

When I'm trading.

My view is I don't want to allocate every possible dollar to the marketplace.

What I do is I limit my allocation to only 30% of my total equity.

That may be shocking to some of you, but it's the truth.

So let's say for instance, I have a hundred thousand dollars trading

account, or let's say you have a hypothetical $100,000 treat.

That means I'm going to be using $30,000 to meet whatever margin

requirements or trade parameters that I use for that trading.

In other words, if I'm going to be doing a percentage basis of my equity,

and let's say for instance, that I'm going to be using the standard in the

industry 2%, that means I'm going to using 2% of 30,000, not 2% of 100,000.

And the reason why that's done is because I'm never going to

have to worry about margin calls.

I'm never going to be over leveraged.

I'm never going to have a wild dips in my equity, but I can still manage

to carve out a very nice equity curve, even just using 30% of my.

Investors like to see that they like to see that you're not 100% exposed.

They like to see that, you know, having, uh, a good reserve of cash in the account.

That way you always have opportunities that you can still take that if they're

really too good to pass on, you have never extended yourself too much and

spread yourself too thin so that we always have an opportunity to take something

that may otherwise not have been.

Uh, on your radar screen, if something comes up in the charts,

something comes up as an opportunity.

You always have equity at your disposal to take advantage of that, that move.

So what you're doing again is you're determining your maximum risk exposure

in a percentage basis on 30% of your.

So you're really, really, really drawn down in the terms of risk.

You're not maximizing the risk for maximum return.

You're looking for a very low end risk exposure with the expectation

that you're going to have consistently pulling in percents of return that

are respectable over a calendar year.

Again, you're ideally set 1%.

As the most risk portrayed, that means 1% of 30% of your total equity base.

Okay.

So you have $10,000 in your account and you're going to

be using 30% of your account.

That means your account trading is going to be based on $3,000,

not $10,000 over leveraged, not looking for the maximum return.

You're looking at only using 3000.

Free trading account to be meeting those margin requirements for your trades.

1% of that is going to be $30.

So $30 is your total maximum risk portrayed.

And I already know what some of your thinking, Michael, I can't get

rich doing this and that's right.

You're not going to get rich right now.

You're not going to get rich tomorrow or next week.

But you're not thinking like that right now.

I want you to consider, and I'm not trying to force you into managed funds, but

I'm trying to broaden your perspectives.

Okay.

On a lot of things and allow yourself the opportunity to even

just think about the possibility.

And again, I personally know from experience, it's not fun

to manage other people's money.

Uh, it, for me, it's very stressful.

Um, but for some of you, it may be exactly what you do.

To get over that hump and you can make a lot of money managing other

people's money rather quickly.

And then you can take that money and seed your own investing, and then you can do

your own speculation, how you'd like to.

And if you want to take a little bit more risk on, not that you should, but you

can do that in that medium, where you get other people's money to pay you, fill

your account up with funds, not out of your own pocket when you can independently

trade apart from other people's money.

And then, then you can close shop on trading other people's money.

And this focus primarily on yourself,

and we targeted three to one reward to risk or higher seven.

Now, again, some of you, or again, totally completely turned off to actually

trading on the higher timeframes.

But for some of you, it's going to be perfectly designed for you.

It's going to be your cup of tea.

If you will.

There's still three to one set ups that are offered on

these hard timeframes charts.

And that's what you're gonna be focusing on.

Now.

Having low risk high reward permits very, very low accuracy.

You don't have to be accurate all the time.

You do have to be patient on this timeframe.

And the other benefit is, is low risk allows equity for more setups

to what you're going to see more possible trade setups by not

having all your money in one trade.

Okay.

Expectations.

I mean, you want to be focusing on a handsome, annual percent return.

Now, what is this?

W w what's an annual return that's respectable.

Um, I think it's 18% to 25% a year, which is like an industry

standard for managed funds.

If you could do that every single year, I can promise you, you will never have

a shortage of people that will want to hand you money and manage their money.

Now as we get deeper into this mentorship, obviously tell you how you can well up

other people's money and reach out to other people through different mediums and

build business relationships with folks that would want to do that type of thing.

Um, again, it's something that you'll have to make the decision on your own.

Using hard timeframe analysis like this.

I want you to go forward from this point on and contemplate

taking long-term trades.

Once we complete January's content.

I want you to think about operating at least for the remainder of this

mentorship for next eight months or so.

You want to be, uh, you want to be focused on doing that very thing, looking for hard

timeframe trades and letting them pan out.

Don't try to get in there and take a little bit out of the marketplace

and then move to the sidelines.

And remember when you're managing money with higher timeframe, trades

years, very little in terms of frequency with higher timeframe setups.

So long-term setups form very infrequently annually.

So there's not a whole lot of trades throughout the year

on a hard timeframe charts.

And when you're trading this hard timeframe, you're going to have to learn

to allow short-term draw downs in profits.

That means.

That while you're in these long-term trades and they pan out because many times

you're going to see that there's going to be retracements that you're going to

have to, whether you're gonna have to sit through several days, maybe a week

or two, where the market has actually given back some of your open profits.

Okay.

They're not realized profits until you close the trade.

So by allowing that mindset early on saying that, okay, I know that there's

going to be some give and take in these.

Sometimes over a period of time when you start trading the larger, uh, this

give and take can be rather large.

It could be, you know, emotionally charging, you seeing tens of thousands

of dollars coming in and out of your account over the course of several weeks.

If you're not used to that actually makes, uh, it makes it hard for you to think

about being objective about the trade.

So the reason why also talk about only using 30% of your equity, getting

back to that, because I know some of you probably snickered and said,

there's no way I'd be doing that, but by having your account only

allocating 30% towards long-term trades.

That gives you equity in margin to trade short term trades.

So that way, while we cannot in the U S trade like a hedger, in other

words, we can't hedge our trades.

We can trade markets that are closely correlated or inversely

correlated with the long-term positions that we are holding.

And I'll give you an example.

For instance, if we're looking at the dollar Japanese yen, if you were trading

this payer and say you happen to be.

Dollar again, if you're short position long-term starts to have, and you can

learn, anticipate these types of things.

When it starts to have a retracement against your short position, you're

going to give back some of that open profit or paper profit before you

realize it and close it and move that profit into your account that give

and take on your P and L is going to be bothersome from some of you.

Most of you, if in fact.

So the way you can counteract that is if you're going to be a long-term trader or

position trader, if you're short on dollar yen, if there's an opportunity for seeing

a bounce in your short position on dollar yen, you can actually go in and trade.

The Euro dollar is it's an inverse related payer and you would do the

opposite, whatever you're seeing retraced and the dollar yen you

would trade the opposite and your.

So if you're getting retracement hire on a short position on dollar

yen, you can actually go short Euro dollar, or maybe British pound dollar

and capitalize some more money in the marketplace while your long-term

position is in somewhat of a draw.

And you're giving back some profits.

You can actually hedge that by trading other payers that are inversely related.

So that's one way you can beat the north American hedging rule, but

you just have to understand simple intermarket analysis, we, which we

just covered in previous lesson.

So having an understanding that there's going to be a give and take,

you're going to have to have that in the forefront of your mind saying,

okay, either I'm going to you.

Shorter-term sewing trades or short-term trades to allow myself to,

uh, compensate for the draw down in open profits on my long-term trades.

And then when that retracement takes shape and comes to

completion, when your long-term trading, then it starts to resume.

You're back in here and you've made more money.

Once you get back to that old equity high and your longterm position.

So you're able to continuously make more money and also cover

those drawdown periods on open profits on your long-term trades.

Now stop loss orders are not a measure of ability.

Now, obviously, you know, most of us in this mentorship or predominantly.

And males have a tendency to like to pull out the measuring stick and see

how they measure up against the next guy or how they measure up against you.

Um, stop loss orders for whatever reason has over the ages.

Okay.

Of, uh, technical analysis, it's become a way of knowing how good you are.

And if you can trade with a 10 PIP stop-loss, you must be elite, um,

that doesn't belong in any way, shape or form in long-term trading.

Um, long-term trading.

It's not it's you don't limit your, your trade idea or opportunity based on a set

number of pips like intraday trading.

I like to have about 35 maximum.

That's about to safe save number for me.

Um, 30 pips as a general rule of thumb, but about 35 pips is about, uh, the number

one go-to number for me, uh, because generally if it's a hundred PIP daily

range, average ADR, not that that everyone is, or that it maintains 150 average.

A third of that would be 33%.

So I rounded the 35 pips and that gives me a, a real good round number to go for.

Uh, but you can use what I've always said before about 30 pips, but on

long-term trades, uh, 30 pips isn't, isn't going to do it sometimes, especially

if you're only trading off, up and keying off of the daily timeframe.

So if your daily chart age, your executable time, Which

is what you'd be using.

If you're trading with a monthly and weekly chart and you can't use intraday

charting because of your business or your, your home life, doesn't

permit you to be up or in front of the charts, or you just have a job.

I mean, it's this face at some of you in here, they have jobs and

there's nothing wrong with that.

I came from a world where I had to go to work too, but you have to understand

that your stops are going to have to be.

Proportionate to the timeframe you're trading in, which leads

us to the next point here.

You know, when you're trading a trade that has a setup that

requires a 200 PIP stop-loss on it.

That means you're risking 200 pips for some of you that's mind-boggling,

there's no way that you're going to permit yourself to risk 200

pips of price movement against you.

Because you're so used to an ingrained in looking at those lower timeframes,

but just because it's a 200 PIP stop loss on a set up on a daily timeframe,

assume for a moment that you're aiming for a 600 PIP wind, that's still a

three to one reward to risk ratio.

There's nothing wrong with that.

You're still gearing the same way you would, you know, to,

to be in line with a very low.

Uh, objective in terms of win rate, you can still do very well with that gearing.

And obviously that's the minimum.

So you wouldn't be looking for higher levels of reward to risk ratios

on these hard timeframe charts.

Okay.

And then another thing you want to think about when you're managing your money

trading with these hard timeframes is.

Resist the impulse to move your stop loss to break even, or even reducing

the risk on a lot higher timeframe.

Long-term position trading.

You're going to have to suppress that desire to reduce risk right away.

Position trading requires a great deal of patience.

And unfortunately there's no way of forming that for

most of you, you either have.

Or you grind it out and you develop it over a long period of time.

It just doesn't happen over night.

So if you don't have a whole lot of time to develop patience, position trading

is probably not going to be for you.

Okay.

And that's one of those things you just gonna have to live with.

Um, If you need to be in front of the market's a little bit more and you're

trading on these lower timeframes, then obviously we can move our stop-loss

sooner to break even and lock in profit on these lower timeframes, higher timeframe.

Just forget that all together, because you want to be waiting for the market

to really be moving a significant measure of the pips before you even

consider moving that stop-loss from the initial point at which you entered.

And you gonna have to learn to exit at logical targets and look to reenter.

At a later time, we can take positions off at logical areas of

resistance when we're in a long-term.

And instead of sitting through a measure of down on our P and L, what we

would be doing is actually exiting the position or maybe some of the position.

And we'll talk about that just when we go into trade management,

we're actually go into specifics.

This teaching here is just to get your mind thinking about some of

the things that's going to plague you as a long-term position trader.

You know, if you're looking at a long-term trade and you're bullish on,

for instance, the dollar in and you get to a level where you would reasonably

in with high probability to expect some resistance or some retracement, um,

you may take some of your position off.

You may take half your position off.

You may take three quarters, your position off a third position off, and, you

know, uh, you know, one quarter of your, uh, position off and allow that to be.

Being your account as a profit.

And then once it retraces back to a level where it would be logically time

to see another move higher in your longterm trade, then you can add back

that position or maybe a little bit more than what you profited when you can't.

And he took off a quarter.

Maybe you'll put back on a third.

Maybe you'll put back on, um, a little bit more than a quarter.

Okay.

Or you'll just put back that original quarter you took.

For some partial profits, and then you can add it back and you can get a

larger petition built on and see that next leg price higher, where you would

make more money than you would've.

If you just would've kept the original gearing and entry

point at the point of entry.

And finally long-term is not get rich quick, but get rich steady.

So before you go into.

The next series of teachings and where we actually go into a little more

detail about what it is you're actually doing with long-term position trading.

Um, just know that you are not going to see velocity for your money

trading, these higher timeframes.

It just isn't there.

Now, velocity is how fast you put your money at work and it makes a profit for

you and you get it right back right away.

That's velocity.

That's why I like day trading because I can compound my money very quickly.

Some of you cannot do that.

And don't feel that you can't be profitable because you can't

do that discipline of trading.

So therefore you can't be profitable.

That's not true.

You can make very, very handsome returns on just long-term position

trading, but it has to fit your psyche.

It has to fit your inner trader, that person inside of you, that

makes who you are as a trader.

It has to.

Fit that, that criteria of the inner person, because if it's at odds

with your thinking process, you can't no matter how you slice it,

it's going to be at odds with you.

You're not going to be able to sit through the trades.

You're going to force things because you're impatiently waiting for

something to come to fruition and it's just going to be a problem.

So the money management aspect will become harder for you.

If you can't get yourself in alignment, but everyone, a U and a mentorship

should be trying to apply long-term position trading to some degree for the

remaining portion of this mentorship.

And you'll see how you don't really need a whole lot of skill

in terms of entry technique.

Okay.

The entry technique you're actually going to learn.

It was fairly simplistic and some of you are practicing, probably start

using it a lot more frequent than I do.

If I wasn't long-term position trader.

But for a long-term position trading, this it's the style of entry that I use.

And when we get into all the entry techniques and concepts,

you'll learn it there.

But before we get into trade entry and stop-loss orders and you know, how

much money should I risk and all that business, you have to have some broad

brush ideas about money management.

And that was the core.

Point of this teaching.

Cause I want you to have their mindset going into it with

yes, you're managing money.

No, it's not going to be a whole lot of trades.

It's not going to allow you to parlay that account quickly.

And it's pretty common sense, but some of you you're so new and you're naive

to the fact that these timeframes require a great deal of time.

And by having that submission to.

It will allow you to number one, improve your overall analysis

because what you see on these hard timeframes, that's what directs the

lower timeframe to move as they do.

But your objective, if you're going to be a managed fund trader and you're

going to be trading other people's money.

OPM as they call it other people's money that, uh, that career is very

lucrative, especially if you are consistent with your rate of return.

And if you can consistently pull 20% or 25% every single year, and you're only

doing a handful of trades now think about.

We've already mentioned that there's very little trades going

on on this higher timeframe.

So if you have every three months, there's a, here's a potential trade that could

theoretically form every three months.

It doesn't work like that though.

Folks, I w I look personally for two and if I'm lucky, three good position

trade setups a year, does that means over the course of January to the end of

December, you're probably going to see.

To very, very simple, easy to find long-term trade setups.

Maybe if you're lucky and you're really dialed in and the market's really

working well, and it's very symmetrical.

You may see a third set up for the year.

Generally, rarely have I seen four setups in, in a full January

to December where I've actually been able to participate in it.

Unless you get into the degree where, you know, you're able to see it better

than I, and that's the goal here.

Also, you want to be better than ICT and also the market profile for that calendar

year is just so conducive for a, uh, for move set up where you have every three

months or so you have, uh, a quarterly shift that would be, uh, you know, that

that'd be great for you, but just know going in the expectations should be,

it's not going to most likely be there.

Okay.

So we're focusing primarily on two really good setups a year and

really milking those positions.

And if we're lucky, we'll get a third.

Okay.

And you're probably doing the math on this and thinking, okay, well, if I just

did three to one and I'm risking 1%, the best I can make is 3% on each one.

Okay, great.

Yes, I agree.

And if you get two, that means you're only making 6%, right?

That's correct.

But you're also only risking 1%.

So that means if you have a setup, that's moved into profitability.

Now you have new equity.

So the equity can be put to work as well, that when new trade setups, and

just because you missed the lowest possible buy for a longterm long

position, doesn't mean you can't get into a position in that long-term trend.

With a long-term mindset and still make more percent return.

And we'll talk about that when we get into execution and trade management.

So don't think you're just going to make well, I can only make about,

um, if there's only two a year and the best I can make is 3% return.

That means I'm going to make 6% for the year.

That's not attractive.

Michael.

That's only if you're taking one setup.

Now, if you take two.

And your maximum exposure is going to be at 2% and you change the roles here.

Then obviously that gives you a little bit more leeway, but it's not, it's not meant

for you to go in and try to maximize how much you can earn what your goal is, is

how much can you manage in terms of draw down, keeping it low and still carve out

a rate of return over the full county.

That's the goal.

That's the homework for the rest of this mentorship.

You want to have at least one long-term trade where you were able to execute

on and hold it through a long period of time, at least three months.

So if you can do that, you'll have what I believe, what I personally

believe that it takes to take, put it to work where you can turn a

profit over a whole counter year.

Now, if you're going to manage other people's.

Okay.

And you become better at your trading.

You understand what you're doing and you're risking 2%

of 30% of the total equity.

If you make 2%, your total maximum risk per trade, and you have several.

Opportunities throughout the year where you can take the position, then

you shouldn't short-term trade or swing, trade, any drawdown periods

you can maximize that you could very easily get to that 18 to 20% rate

of return on equity for the year.

You're not going to be doing a whole lot of trades.

You won't be forced to be in front of the marketplace.

Every single trading day.

You're actually going to be there.

Free with your personal time.

That's the reason why large fund managers are always on vacation.

They're always doing that because they're not trading every single day.

The idea is that you want to put other people's money at work for you, but

under the guise that you're doing it there, you're doing them a favor rather.

But really what you're doing is, is you're trying to do is very little as

possible because the more times you take a trade with other people's money,

the more times you're exposing them to.

When you expose a client to risk enough times, eventually that

risk will grow teeth and bite you.

Now you're going to feel it emotionally and psychologically and monetarily

the client's going to feel it monetarily, and they're going to be mad.

They're gonna be upset.

And especially if that drawdown continues for a long period of time, it eats in

erosion into what their equity base was and when they allowed it to you.

So if you can keep your frequency low and focus on.

Hi, odds, potential setups and keep the risk light and carve out that

rate of return 18 and 20% per year.

People will dog pile on you throwing new money at you.

And as you have a management fee, all the, uh, percentage bonuses

that you would establish and set up when you make your perspectives

and you sit down with clients, all of those things are in your favor.

The client would be making money too, obviously, as a result.

But you're not working yourself too hard to get that money for them.

And therefore, because it's going to be a large degree of money, hopefully

a pooled account where you're having other people pull money into it, not

just you and one client, you want to work with a fund level that has ability

to bring other people's money in.

And when you do that, it builds that equity base a lot larger.

So that way, if you're making a 25% rate of return on say $10

million, now we're talking about.

A little bit more significant.

And then if you have a 2% management fee on top of that,

you're getting 2% management fee, regardless of what you make.

And then you get a performance bonus that you would set up

all that goes into your pocket.

So yes, in your mind, you're probably thinking I'm going to push it to the

limit and get a better performance incentive in terms of paying myself.

That's not what your goal should be.

You should be having a steady Eddy approach.

Only aiming for that easy low-hanging fruit.

The clients will absolutely love you.

They're going to talk about their, their, their fund manager.

You, every time they go out, they're all going to asking, you know, who is he?

Can you, can you talk to him for me?

And new funds will always find our way to you.

So your account that you manage would continuously be growing and

allowing new funds to come in.

And that.

By default keeps pushing your pay every single time.

This happens, your pay goes up.

So it's not about how much money you have right now.

It's how you can manage money right now and going forward.

And the goal is not to see a lot of draw down.

Draw down, happens by way of a lot of action, because no matter

what, it's a numbers game, you can be good all day long.

Okay.

But you, if you play the game enough, you get up to bat enough times.

You're going to strike.

When you do it with other people's money and you're managing that

money, you do not want to have a big, long drawn out, strike out period.

You don't want that.

They want to see consistency.

And if you're consistently infrequent with risk exposure, but you're

showing rate of return, that's handsome over the calendar year.

They will love you and love in the form of managed funds.

Is.

Lots of money.

It comes by way of new funds.

They put more money into your hands because they've seen

that you've proven yourself.

A lot of folks will test you out and I'll put a small amount of money.

Okay, I'll see what you do with this.

And if you show consistency and a rate of return, that's very

sobering and it's not over the top.

You're not trying to swing for the fences managing this money.

Okay.

Well, invite in by default other money to come in by either the client you

already have or clients that you.

And by their word of mouth, because they will invariably talk

about what you're doing for them.

New money is very talkative.

It likes to chatter.

So when it talks to other potential clients, they by default will reach

out to you and you will see your, your fund management business.

And that just puts more money in your pocket.

And again, nothing changes just because there's more money coming

in and you're managing you.

Don't want to change the idea of what you do about your trading.

You're not trying to impress anyone.

You've already made the impression that this is the rate of return.

You're aiming for.

There's no guarantee you're going to get it, but are they

going to be mad if you made 16%?

No way.

They're not going to complain about that.

If they made 16% on their own.

And they had very little period of drawdown where they didn't have any real

exposure to risk, but they had 16% rate of return, 16% return on $10 million.

It's respectable.

You can't find that rate of return anywhere in the marketplace.

Right now.

They don't get it in CDs.

They don't get it inequities.

You're not getting it in, you know, money markets or anything like that.

So what they're doing is they're allowing you to work

for them by managing that money.

Well in their eyes, you're working really hard.

And when you're managing money, you don't want to be working hard.

You want to be working smart and smart means you're not doing a whole

lot of work to make that money.

You only want to put it at risk when it's very favorable.

And you'll see when we get into the execution stage and the management stage

of long-term trading, you'll see this.

It takes very little to do very well on these hard timeframes until next time

I wish you good luck and good trading.