Dan emphasizes the importance of removing noise and using pivots and supply or demand zones to identify potential shifts in direction.
Dan follows a trading strategy based on 60-minute charts, focusing on stocks that confirm supply or demand zones, aiming to benefit from the barry sanders effect.
Dan highlights the significance of risk management, including calculating maximum pain points based on account size and evaluating market sentiment to assess trade viability.
Deep dives
Trading methodology and approach
Dan Chapero, an experienced trader, discusses his trading approach, focusing on intraday time frames and high beta stocks. He emphasizes the importance of looking at pivots on charts and combining them with supply or demand zones to identify potential shifts in direction. Dan stresses the need to remove noise and emphasizes the value of patience. He also explains how he uses multiple indicators like moving averages, Bollinger Bands, and linear regression lines to identify points of interest and navigate trades.
The power of trading 60-minute charts
Dan Chapero explains his strategy of trading based on 60-minute charts, rather than the popular one-minute charts commonly used by many traders. He criticizes the overemphasis on one-minute charts and the prevalence of noise and uneducated traders in such short intervals. Instead, Dan focuses on trading six 60-minute candles throughout the day, looking for stocks that confirm supply or demand zones and build upon those levels. By doing so, he aims to benefit from the barry sanders effect, where stocks with room to run can provide significant profits.
Risk management and position sizing
Dan Chapero emphasizes the importance of risk management and position sizing in trading. He suggests defining a maximum pain point based on a percentage of account size to limit potential losses. By calculating this maximum risk, traders can determine the number of shares to buy and maximize their potential gains. Dan also highlights the significance of common sense evaluation and observing the overall market sentiment, including futures and other correlated stocks, to assess trade viability.
Importance of Building a Trading Process and Starting Slow
When it comes to trading, it is crucial to have a solid process and start slow. Traders should avoid the temptation to jump into high-risk trades or chase after fast-moving stocks. Instead, they should focus on building a strong foundation by analyzing charts and looking for stocks that are breaking out of a range. Patience is key, as traders should wait for a stock to confirm its breakout before entering a trade. New traders should also avoid getting caught up in the excitement of social media and the allure of high-growth stocks. By starting slow and prioritizing a careful approach, traders can set themselves up for long-term success in the market.
Reflection on Trades and Risk Management
It is important for traders to reflect on their trades and practice proper risk management. Reflecting on trades once a month is recommended, rather than getting caught up in daily or weekly evaluations. Traders should focus on the overall performance of their trades, not just individual winning or losing days. It is critical to avoid turning a losing day into a bigger loss by trading impulsively or stubbornly. By managing risk and setting realistic expectations, traders can navigate through winning and losing periods and ensure that losing days do not derail their overall profitability. Finally, traders should negotiate favorable commission rates and invest in reliable platforms and software to support their trading activities.
This week we have returning guest, Dan Shapiro, who was first on episode 32. And after receiving a lot of really great feedback from that interview, I knew I would have to have him back on, so here we are…
Dan works on an intraday timeframe and predominately trades high beta stocks. He’s been trading for 16 years, and during this time has experienced the extreme highs and lows that this business can throw at you. For a good part of his career, Dan was heavily involved in the prop world, but now trades independently from New York.
Over the next 60 minutes you’ll gain some insight to Dan’s methodology, thoughts on managing risk, an outsiders view on the current state of prop trading, and more…
This interview will leave you with plenty to think about, and may even help you to adjust your mindset – if that’s something which is holding you back.
