The Forex Trader With 86% Winning Rate (With Darek Dargo)

Video Transcript

Rayner (00:02)

Hey Hey, What’s up my friends?

We have Darek Dargo in the house Baby!!!

So Darek is a full-time forex trader.

He has been profitable every single year for the last 7 years.

Do you know what is even crazier?

I have seen his track record. He has taken nearly a thousand trades and can you guess his winning rate?

He has an average winning rate of 86%.

This is a man you want to learn and hear from especially if you trade the forex market.

In today’s episode, here is what you will learn.

• How Darek got started in trading and why he chose to specialize in the forex market.
• Darek’s proprietary price action + MACD trading strategy (Entries, Stops, and Targets).
• The OPOS trading strategy (Suitable for those with a full-time job).
• The difference between supply and demand and support and resistance.
• How Darek handles news events in trading (And it’s not what you think).

All this and more in today’s episodes, are you ready?

Let’s go…

Rayner (01:39)

Welcome Dargo to the show. Happy to have you today.

Dargo (01:43)

Hello, nice to see you, Rayner.

I’m also happy to have this podcast or interview. I’m happy that I have an opportunity to speak with someone who lives 15,000 kilometers from me.

Rayner (02:03)

That’s pretty far, right?

One thing that I want to say is that we haven’t known each other for a long time, but having interacted with you, and seen your postings, I admire your trading approach.

Where you combine both, price action and indicators.

Because you know, people fall in kind of like one of two.

Either I’m a price action all the way, a hundred percent naked trading, or I’m going to go down with the indicators.

But you have a blend of both and I see that it worked out for you. I like the thought process behind your trading.

We will dive in more later.

That’s my appreciation for your trading methodology.

To kick things off, if I were to ask you in one word to describe your growing-up years.

What would that one word be?

Dargo (02:54)

I must say, when I started, did you mean the whole life or did you mean the trading-only period?

Rayner (03:07)

I would say more towards growing up years…

Maybe could be anywhere from you know when you were 5-20 yrs. old.

It’s more of your personal life.

Dargo (03:19)

I’m a person who likes competitions. I like to compete with everything and anything.

I like to compete with my friends in the school to be better.

I liked to compete when I started training in sports.

I like to compete also when I’m a trader because when I’m trading, I have one competitor, it’s the market and me.

That’s what I love about trading there is nobody around me.

Nobody will tell me what I should do.

I’m just using my knowledge.

I like competitions. I’m the same as I was 10 years old.

I always would like to be the winner.

Rayner (04:17)

Could you share with me a time when you competed and perhaps the outcome wasn’t what you were looking for?

Are there any stories that you can share?

Dargo (04:32)

Well, competing for me means getting yourself better.

Because if you don’t have to compete with somebody, you’ll never know what level you’ve reached.

You only can test your level if you compete and compare yourself with someone.

I was living in Sri Lanka for over six years when I was a boy.

I was there with my family.

My father worked in a Polish embassy, and I was just a child.

I lived in Sri Lanka in Colombo, and my father took me to a swimming pool.

Just saying…

This was a huge opportunity to learn to swim because, in our country, we couldn’t swim outdoors for more than two months a year because of the climate.  

For the swimming pools, we had a few of them in those years.

When I was walking by the pool, I slipped and I fell inside and there was nobody around me.

This was the way I started learning to swim because I had to survive.

I fought with all my strength.

After three months, I started competing in a swimming contest in Sri Lanka.

I got the championships of Sri Lanka in diving and swimming in a hundred-yard pool.

That’s how I started feeling that competing makes me stronger.

Rayner (06:22)

That’s crazy.

It’s like you accidentally fell into the pool and most people if there’s no one around, they could have drowned.

But you found yourself by the bank.

From there, you started having a passion for swimming, doing it competitively, and within two months, you won a championship.

Dargo (06:40)

Yes. It was a lunch break.

Nobody was in the swimming pool.

People were sitting in the shadows, drinking some beer, and eating lunch.

Because this was a club, it was called “Otter’s Aquatic Swimming Club” in Sri Lanka.

It was a club for people who just liked to spend their free time there.

It was also a restaurant with everything around.

The pool was just a part of this huge complex.

I was alone in the swimming pool at that time.

Rayner (07:19)

For most people, if they fall into the pool and they have no experience of swimming, there’ll be fear, right?

Was there any fear in your mind when you were in the pool then?

Dargo (07:26)

Yeah, of course.

I just don’t remember so clearly.

But when you compare this moment with the moment when you start trading and you fail, it’s nearly the same.

You just need to stand up and try again.

That’s my approach to life and trading.

Rayner (07:42)

But in swimming, if you fall and you don’t have the skill, you might drown and know it’s a lot more serious than just blowing up a few accounts and trading.

Dargo (07:54)

Yeah, the stress is nearly the same.

This wasn’t a deep swimming pool.

I fell where it was not so deep.

It was about maybe one and a half meters.

If I had fallen in the deep water, because there was also the second part of the pool was very deep because there’s a jumping tower.

Then it would be worse.

Probably, we won’t speak today.

Rayner (08:20)

I see…

How old were you when you fell into the pool?

Dargo (08:28)

I was eight years old.

Rayner (08:30)

Eight years old.

You said that your father worked in the embassy and that’s why you’ve been there in Sri Lanka for six years?

You mentioned that.

Then you got into competitive swimming.

Since competitive swimming and trading are all very competitive endeavors.

Where do you think the similarities lie between competitive swimming and trading?

Dargo (08:48)

As I said at the beginning, we compete with someone, either with other swimmers or we compete with the market.

We know that traders like to boast about their results.

If you check the internet, you only see good results.

You never see those people who lose.

Someone who hasn’t the idea of trading will say…

“Well, it’s a perfect business, everyone is winning”

When I compare swimming and trading, and I know many people who are losing, I say it’s the same as in a contest.

There’s only one winner and most are losers.

The same is true in trading, I believe that 20-30% are winners and the others are losers.

But it doesn’t mean that if you lose today, you can’t win tomorrow.

This is the same as when I started swimming.

I came seventh, eighth in the contest, then fifth, then I was third, and then I was first.

Everything means that you need to practice because swimming is such a kind of sport that you cannot achieve good results if you are not training.

I always compare football with swimming.

In football, you can accidentally kick a ball and it will fall and make a goal.

It can happen accidentally.

You have no accidental results in swimming.

If you are not well trained, you cannot change your results, let’s say five seconds in 100 meters daily.

It’s impossible.

That’s why swimming training is one of those sports where you need to work hard.

I was training twice a day for about 10 years, even on Saturdays, six days per week twice a day.

Early in the morning at six o’clock before going to school, and then when I come back from school, I will train then I get back home at six o’clock in the evening.

I respond to the problems in a very easy way.

Problems are just one of the things that I need to solve.

It’s not making me sad or historic. Because I feel that an obstacle is something which you need to fight with.

Is it life, is it sports, or is it trading?

This is very important; you need to be hard like a stone.

Generally, sports give a lot because I learned to be hard and I said…

“I learned to be tough, not soft’’

That’s it.

Rayner (11:58)

I love it.

I’m curious because when you mentioned you train twice a day for swimming, I believe you’re competing at a high level.

What kind of level are we looking at as competitive swimming?

Dargo (12:06)

When I was young, my best result, was the finals in the national championships.

I never got a gold medal when I was a youngster.

I came back to swimming in 2005 as a master’s swimmer.

Those are older people still taking part in contests.

It was over 18 years ago. I’m still training, not so like I did when I was young.

Now I’m training three times a week only.

Let’s say per year, I’m swimming about 300 kilometers only.

It’s not a big attempt, but you know, the age is also, you need to remember your age.

You cannot do too much because you will spoil your health.

But the best results I got as a master because I have about 20 national records at the moment and I am not able even to count how many gold medals I got in my different age groups because I started training.

I came back to swimming when I was about 40 and from that time on I lost very rarely I would say.

I was taking part in the World Masters Championships in Gettrborg.

I took part two times in the European Championships, It was in Cadiz and Slovenia.

I like to travel and swim also.

It’s an opportunity to meet nice people.

I met people from all over the world when I was in the Championships in Gettrborg in Sweden, there were seven thousand people taking part in these championships and there were people from the whole world.

I met then people who I remember were idols for me when I was young.

Those were people who were world championships in swimming.

That time when I was 18, they got gold medals at the Olympic Games.

Then I competed with them when I was 40.

It was something wonderful.

In Gettaberg, there was a swimming pool with a huge green field, because it was an open swimming pool.

There was a kind of picnic there where a few thousand people from all over the world were just speaking, exchanging the T-shirts and the swimming caps.

I have one from Brazil from a swimmer who won the world championship at the Olympic games.

For me, it’s a kind of a nice item I have.

That man has a history of swimming.

That’s something which you must find a balance between work and entertainment.

You cannot work only because if you work too long, the effects are even worse than if you work just the optimal time.

The same as with trading. I try to trade not more than five hours per day.

If you stay before the computer too long, you gaze at the chart, you know a man’s brain is not perfect.

When it gets tired, then also the results are bad.

I hate overtrading.

I remember when I started trading 15 years ago.

No, I started trading in the 1990s.

Probably most of our viewers were not in this world.

In the 1990s, big changes were taking place in my country. We became independent from the Soviet Union, which was keeping us in very strong relations and we weren’t able to do what we wanted.

In 1990, the changes came, and then also the stock market was reactivated.

I started to learn the principles of the capital market, the mechanics, how to govern the market, what is the demand, what is supply, and what the capitalization of a company means.

In the 1990s, the Warsaw Stock Exchange was reactivated.

I remember my first buy, I bought 100 shares of a Polish company, Electrim.

It was a company that was building the highways.

It was a construction company.

Believe me that those 100 shares, I sold two years ago.

I kept those shares for over 20 years.

It was 1991 when I started buying stocks.

I sold them in 2021.

It was 30 years because the company was not existing at all anymore.

It was just divided into small companies or other companies.

Then someone started buying those shares because they were not already on the stock.

Rayner (17:28)

Why did you sell?

Dargo (17:29)

I got an offer by mail that I owned 100 shares of this company,

I had two choices; I could sell them or I lose everything.

I got some money for this, not big money, but still compared to what I invested, it was still about 500% more than I invested compared in dollars when I counted because of the change in value.

But you know, those are funny times when the stock exchange, there were quotations twice a week, Tuesdays and Thursdays.

There was a limit that a stock cannot go up more than 10% per day and cannot fall more than 10% a day.

It was like a casino, buy or sell.

It had nothing to do with the real market. But then one day came a black Thursday.

There was a crash and the stock started falling like crazy and luckily I took out the money I invested.

I was not in a big minus.

But I know that many people lost everything and there were problems.

Some suicides and so on it was a black Thursday in Poland.

Then I came back to trading after some years

How it started, I don’t know if it’s interesting, but how I started, many people, when I asked, how you started trading?

“Oh, I saw it on TV”

“Oh, I saw it on the internet”

“Oh, someone called me that there’s an opportunity and I started thinking about trading”

The way I started was different.

I started with real money, real exchange, and the interbank exchange because I was running for several years a foreign trading company.

I was buying and selling, I was importing goods from China and selling them in Germany.

I was buying Polish products and selling them in England or Italy.

I guess it was just a typical trading company.

When I was buying and selling goods from different countries for different currencies, I had to exchange those currencies.

Now, when I want to buy something in China, I need dollars, okay?

I sold the goods for the German Deutsche mark so I had to change the Deutsche mark to dollars.

Then I noticed that If I waited a few days, I sometimes got a better exchange rate than I would have on Monday.

Let’s say…

“I wanted to exchange 100 000 Deutsche marks on Monday”

But I said…

“Oh, I’ll wait until Wednesday. I got a few dollars more”

I noticed that I could make money or lose on the currency conversion exchange rate.

I started following the charts because before I just had the info from my bank…

“How much I will get for the British pound”

Oh, so many dollars.

Okay. Thank you. I’ll wait.

Then I got to the charts and I started watching the charts and I said…

“Some kind of system that I can foresee that the bucket will go high or lower”

That’s how I started gaining money and exchanging the currencies.

But those were real markets, not contracts for different.

Those were not futures.

Those were real money to real money.

Now, this is one-to-one without the leverage at that time.

That’s how I started watching the charts.

Then when I closed the company, I started trading.

Since that time, I’ve been in the trading. I don’t have any other activity at the moment.

Rayner (21:32)

How long have you been doing Forex trading since you mentioned you sold the company?

Dargo (21:37)

Something about 2008 I started my first contact with charts.

I was always looking at the charts of stocks.

Because I had it in my blood that stocks were always interesting, but I didn’t invest much money.

It was just a hobby.

But when I started looking at the exchange rate, this was 2008, and 2009, I found that contracts for difference are so easy to trade.

They are so easy compared to the stock market.

I said…

“Well, with the stock market, I can only buy”

I can try it in only one direction.

I can buy it and hope that it will sell at in better price.

But on contracts for different, I can trade both ways.

I said…

“Wow, it’s El Dorado for me”

I can sit two hours before the computer and I can buy, sell, and be rich in a few hours. Of course, the reality was a bit different.

I remember burning my first account. It was crazy.

I opened an account, a real account, and I invested not a huge account, it was about $5,000.

I made from $5,000 to $15,000 in 20 days.

I said…

“Wow, this is this”

I mustn’t work anything anymore.

I’ll just trade and I’ll be so rich that I don’t know what to do with the money probably.

That time I started swimming also.

I left an open trade on USDJPY with a big volume because I was trading crazy.

It was 10% up, 10% down.

I went to the swimming pool. And when I came back, I found that there was $10 on the account.

I said…

“What is this?”

The first thing I thought it was a scam, was that someone cheated me.

I called the broker, what happened?

The broker said…

“Well, check your account and see what happened”

Then I found out that there’s something that we call payrolls.

It was a payrolls day and the payrolls were very positive for the dollar and I was shorting the dollar against the Yen.

I lost all my accounts on one trade only.

I remember that from that time I said…

“Okay, so the fundamentals also have some influence not only those lines on the charts”

Then I started following the fundamentals.

Now I combine a bit of fundamental be technical analysis.

I think that technical analysis is still let’s say 70% of the reason that I opened a trade.

But there are a few events which we need to watch.

Payrolls, central bank decisions regarding the monetary policy.

Lately, also the CPI reports, and the inflation rate report.

Because yeah, you remember the time when inflation was about 2% and it was not changing nearly, and this was not any important news.

But nowadays, sometimes the inflation reports are even more important than the central bank decisions.

Those three things, we cannot get crazy and watch every event because it’s nonsense.

Most of the events have a temporary impact, maybe a few hours and things go back to normality.

But payrolls, CPI reports, and central bank decisions, especially when we expect some…

Interest rate changes are those things we need to watch.

Rayner (25:24)

Why did you choose to focus more on the forex trading?

Maybe instead you could have done things like stock markets or even CFD.

Why forex trading?

Dargo (25:34)

I think that the volatility is really interesting on the currency exchange.

The currency exchange rates are moving.

There are some special pairs, which I love to trade.

I like to trade Pound with the Japanese Yen.

It’s a pair which is giving huge opportunities.

It’s a trending market.

The trends last for a few days, at least.

I’m a swing trader.

Let’s say that the general.

I’m a swing trader and a scalper.

I am not a position trader.

I rather prefer scalping and swing trading.

But generally, from stocks, I like to trade indices, the S&P 500, and the German 40.

Those are the indices I trade also. I don’t trade exotics.

Because exotics, there are huge costs.

The provisions the brokers take are huge on the exotics.

The spread is huge.

Also, the probability that the market will change in a second is huge because those markets like to be speculated.

The markets are not always behaving like they should.

Two currencies are also manipulated.

It’s Yen and Swiss franc.

We know that the central banks have a huge impact on what’s happening.

Bank of Japan is a special type of manipulator.

I would say…

“That’s why things which are happening on the Japanese yen, we cannot understand them”

We just need to feel them only.

The only country in the world which has a negative interest rate is Japan.

The inflation they have is at the same level as the United States.

When we look at the dollar with Yen, from the fundamental point of view, there’s no reason that Yen could get stronger.

You get five and a half percent of your savings in the US bank if you keep it in dollars.

If you keep your savings in Yen, you get minus zero one.

So why should I keep yen?

The fundamentals also help us to understand the markets.

The fundamentals are also in.

Rayner (28:04)

All right, so you’ve been trading Forex full-time for the last, was it 3-7 years?

How many years has it been?

Dargo (28:11)

I think it is about 15 years now.

Yeah, but the main contracts for different contracts for difference

Rayner (28:16)

Since 2008 you’ve been trading Forex full-time actively.

Nice. Okay

But for now, it’s still contract for difference or is it more of trading forex in the OTC markets with the brokers?

Dargo (28:28)

Yes, something like this also I have a few accounts.

I also have a futures account. I cannot say that I’m only in one direction.

But at the moment I must say that the contracts for difference for me are perfect for trading

Rayner (28:47)

Okay got it.

I think because in different countries they call it differently.

Some call it contracts for different, some call it spot forex, and some have forward futures.

There are many ways to trade the currency market not just you know on certain like OTC markets.

I think different countries have different ways or different accessibilities for their retail traders to access it.

Dargo (29:05)

Yeah, over the counter, it’s nearly the same as contracts for difference for me.

Rayner (29:10)

Let’s touch a little bit more on your trading approach.

I know you specialize in the forex market.

Maybe a high-level overview, maybe you can share with the listeners, the audience, how do you trade the forex markets?

We can talk about the high-level overview first, and then maybe later on dive deeper into the specific strategies that you trade.

Dargo (29:29)

How I trade Forex market.

The first thing is that I always say that it’s no matter how you trade, or what kind of strategy you use, it’s very important to stick to the rules.

If you have a strategy and you test it for five, or six times only, this gives you no idea, if is it a profitable strategy or not.

If you can backtest the strategy, it’s even better, but not all strategies are possible to be back-tested for many reasons.

I use expert advisors, but I must say that I don’t know how to program them.

I only gave some instructions to my friend and he wrote the code.

I found it a bit problematic for me to give my ideas to someone, he would turn them into mathematics and so on.

So, I quit expert advisors.

Now I’m training manually.

I must say that the most important thing for me is not what I’m training, but how I’m training.

Because each instrument is good for trading, but you need to find a special approach to it.

You cannot trade in the same way.

Currency like the Pound is very dynamic compared to Euro which is flat.

The first thing you need to do is describe the market, is it a consolidation market with some range?

If it’s very volatile then you need to use this specific strategy for that instrument.

The strategy must suit your character and your lifestyle.

If you are a full-time trader, no problem, you can try different strategies.

But if you are working, and I believe most of our viewers, our friends, they are working and trading.

They must have such a strategy which will fit their lifestyle.

If he comes back from work and has only three hours per day for trading, he must have another strategy than someone who can sit before the computer from early morning to late evening.

That’s why I always say that people who work and don’t have much time, want to trade and use it as a hobby.

They could use a strategy that is based on pending orders.

I have a strategy which is called “OPOS”.

It’s a strategy based on pending orders, but you have supply dimensions and you plan a trade in front.

Even if you are at work, the broker will open the trade if it’s pending or if the market hits that level.

I’m a full-time trader.

I use mainly a strategy that is based on manual opening.

I open the trades manually

I have a strategy with very objective assumptions.

What I mean by objective, is that my strategy is based on three questions.

Those are questions that I call zero-one.

You can only answer yes or no.

You cannot hesitate to answer if the assumption is matched or not.

If I say…

That part of the strategy is based on breakouts.

 If I ask myself…

Was the breakout done or not?

I already see it on the charts.

Yes.

Because the market is closed below the or over the level or not if it didn’t do it.

Very simple question.

The worst strategies my opinion are those where you hesitate maybe yes, maybe no, I don’t know, I must think it over.

The best test is if you have 10 people before you and you ask them a question, if 10 of those people can answer the same, it means this is an objective question.

If I ask someone, is it outside, is it day or night?

Of course, everyone says yes, it’s day because the sun is shining and no problem.

But if you ask someone about the weather in China at the moment, someone will say…

“Oh, I don’t know. I must check it”

Maybe it’s sunny or maybe it’s winter.

This is the problem.

The assumptions of the strategy must be very simple.

My strategies are very simple price action and as you mentioned at the beginning of the session, I am using MACD.

It’s an indicator.

I sometimes feel shy saying that I’m using indicators because I know that markets believe that naked trading, is not we naked, but the charts are naked.

It’s of course the best way of trading.

Indicators are disturbing, distracting us, and so on.

I thought so also at the beginning when I started trading.

I only tried to use no indicators.

Then I started testing hundreds of indicators.

I remember a chart when I had about 12 indicators at once on it.

Then I found out that, it’s not the way.

I started eliminating all the indicators and the only indicator that survived is the MACD.

But I’m especially using MACD. I’m not using it as most people show that there’s a signal line and so on.

 I’m just looking at the changes in the direction, but it’s not all.

The MACD is an indicator that filters the setup.

It means that it’s not deciding to enter a trade is based on three steps.

First, I need a pattern like an inside bar, outside bar, or pin bar.

Then I need a break up from that pattern.

Then comes the MACD as a filter.

If MACD is not showing any changes, it’s still in the same mode, let’s say bullish and I want to shorten the MACD to say…

“No shorting. Wait”

That’s how I’m using MACD.

The MACD is not the only decedent.

It’s not the reason that I open a trade.

I need some more signals from the market to open a trade.

What’s important is keeping up with the rules. Even if things don’t work 10 times it doesn’t mean that it will not work.

You must test it 100-300 times before you can say…

“Yes, you have an edge or not”

Rayner (36:36)

What if let’s say…

“You test a trading strategy 300 times and then it loses money”

 What’s your next step?

Dargo (36:41)

If I see that from 300 trades, over 50% were losing.

It’s time to change the assumptions of the strategy or just quit it and search for another.

Normally, the main strategy I’m using, it’s very easy to test it.

If you want to test it, you just sit down during the weekend when you have more time you just search for the patterns.

I use my favorite patterns are engulfing patterns.

Two candlestick patterns and you can check all the engulfing patterns on the chart.

Let’s say three months and check what happened after the breakout.

Did the market follow the breakout or was it a false breakout?

Compare it with the MACD is not repainting

It’s always the same.

It’s not that because many indicators are repainting themselves.

When you look back in history, it’s showing you perfect results.

But in the moment when it was different.

Those repainting indicators are absolutely scams.

I hate those things and people get caught in it.

People buy those indicators.

But at the moment, when you want to make a decision, the values are different.

My approach to the market is that.

If I can test the strategy and when the assumptions are so simple, I can spend even four or five weekends on this.

When I saw that from 100 patterns 70 worked.

Okay. I think that’s worth trading the strategy

Rayner (38:24)

I think maybe for the audience who are listening.

So MACD, there are two main approaches to it.

One is the lines, the squiggly lines that show up on your charts like moving averages.

The other one is specifically called the MACD histogram.

I believe you are focusing more on the MACD histogram.

Am I right?

Again, so the MACD histogram, correct me if I’m wrong. It measures buying and selling pressure in the market.

The histogram can be either, I think on Tradingview, the default color is green and red.

If it’s red, it means that there is more selling pressure.

If it’s green, there’s more buying pressure.

I think maybe to kick things off, now that we’ve kind of explained to the audience what the MACD Indicator is about, how you use it.

I think you also have certain settings for your MACD Indicator based on your preference.

Maybe you can share the specific settings that you use.

Dargo (39:14)

I must say that maybe the settings themselves are not so specific because traditionally it’s 12.

What is MACD?

MACD is just showing us the distance between two moving averages, exponential moving.

One is 12 period and the second one is 26 period.

We can say there’s a slow-moving average and a fast-moving average and the distance between them is what we see on the histogram.

Sometimes it’s below because it’s oscillating around the zero line and then it’s a question because the original MACDs have one color.

It means that it’s non-stop just one color gray or blue or red doesn’t matter.

But the one I am using is double color.

It means that any time it’s changing the direction. It’s changing the color, why because it’s easier for me to analyze the market.

My approach to the market is very simple.

I open my computer and search for the moments when MACD just started turning around, making a U-turn.

Then I looked to see if there was a pattern and so on.

It’s easier for me to select an instrument for trading when I look at the colors.

You know, it’s so simple.

A child could even do it.

My son at the moment over 30 years old

But let’s say I would ask my grandchildren, the children who are, let’s say, six years old, I say…

“OK, come here, come here, find me a screen where MACD turns red for the first time”

He can do it for me.

It’s so simple.

When he says…

“OK, Grandpa, on EURUSD, the MACD just changed to red on the four-hour chart”

Then I look at the chart and say…

OK.

This is one thing but it’s not enough for me.

I need to see the market making a high of this swing high.

I need to have a pattern.

Some more things are coming.

I don’t know if you have had the problems also when you started trading.

When you open the charts, what should I start with?

Which market is giving us a chance for a trade?

Many times, I had that problem when I started trading, which is the moment?

What is the best trade instrument to trade?

Now I have no doubts.

I just scroll and see red…

“Oh, here it comes”

Today I saw that as I remember it was on GBPUSD, that on daily there’s something changing.

I say…

Okay.

I put it on my watch list.

I’ll come back to this in the evening and I see how the daily candle will close.

If it’s close to bearish.

It might be a signal for a correction.

If I see that the market is trending and I see that MACD has fallen below the zero line, maybe it’s time to join the trend again.

It’s so simple that people don’t believe that it works.

I mentioned some time ago during our last webinar, and I’m happy that I could share my ideas with your community.

There was a question about the efficiency.

I said my efficiency is 84%.

It means that I made a thousand trades and 840 trades are winners and 160 are losers.

I saw that people don’t believe in it.

I will show them today. I’ll give them the link to the account so they can check it’s a live account.

It’s an account that is two years old and they can do it.

You can see it because I know that this strategy is working, but maybe people need some more proof that it’s working

Rayner (43:04)

I think you started with the MACD and the price action strategy.

Let’s talk about that first.

You mentioned I think the first thing you look for; is you can go different ways.

You look for maybe a MACD histogram, right?

Let’s say the histogram is now green in color.

You’re looking for a downtick, meaning from green to red.

What about market structure, does it matter whether the market is in an uptrend or downtrend?

Or the first thing you look for is just a MACD histogram?

Dargo (43:38)

First thing, I look at the histogram, but then I analyze the market very closely.

Because the fact that MACD changed the direction for me is only a hint that this might be an interesting instrument, not all situations.

Rayner (43:54)

Okay.

Dargo (43:55)

MACD not in all moments can show us properly what’s happening because MACD must be extended it cannot be flat it must be high away from the zero line.

Second thing it must be regular for at least a period It cannot be that choppy, changing red, green, red, green.

In that module I made on your platform, I mentioned that MACD must also fill in some rules.

The value must be high enough and it must be regular for at least a period.

It cannot be choppy as I call it.

This is the first thing, but it’s not enough for me to trade.

It’s just a way to select from 35 charts which I have the most interesting.

Let’s say I have 35 charts open at the moment and I will choose only three of them because on three of them, we see that U-turn of MACD.

Then I go close and look, if I see a huge strong trend, I don’t want to trade against a strong trend because I trade on the corrections.

But I prefer to join the trend.

So sometimes I say…

“Okay, let the correction run”

When the correction will be over.

I will join the trend. I of course analyze high timeframes, daily and four-hour charts.

Using this price section and MACD strategy.

For scalping, I have a different strategy.

It’s also based on MACD, but then I don’t look at all the patterns. I look only on high lows and swing high, swing low.

This is what I said at the beginning. You need to have an approach to the instrument individually.

I love to trade gold because gold and MACD are best friends.

I must say they are so friendly.

They are so nicely correlated that I was showing many times on my webinars that It’s something incredible how gold and MACD are working together on daily and four-hour charts.

It’s a charm and if you understand when MACD makes sense and when you should avoid it, the efficiency is 80% of the entries.

Rayner (46:55)

Got it.

From what I’m hearing is that you don’t just look at the MACD histogram. like, from green become red, you sell. Or red becomes green, you buy.

But rather you want to see, there’s like a proper app and flow to it.

You only see it kind of like, there’s a peak to the greenness.

There’s like sudden, I don’t use the word overboard, right?

But you can see that the spike in the MACD histogram is pretty much large, right?

Large relative to the earlier spikes of the histogram.

That’s where from green, it becomes red. And that’s kind of like your first condition and then you start to look for other patterns like you mentioned the inside bar, the outside bar, the engulfing pattern, etc.

Hopefully, I got that part correct and you want to avoid those magnetic histograms where it’s near the zero-line chopping up and down you typically avoid such conditions.

Dargo (47:39)

Yeah, definitely. It’s not worth the trading.

Just what I would add because it’s very important to understand what is an inside bar is, and what is an outside bar.

Inside the bar is nothing else but a consolidation.

It means that there’s a huge day and then the market cannot break the top, the maximum, or the minimum of the day.

This is the inside bar.

What we say about consolidations is, that break up from consolidation is an opportunity to trade.

That’s why breaking from an inside bar means to me that the market decided to move.

What is the direction of the breakout?

Of course, we have false breakouts.

Trading would be too easy if every breakout would work.

MACD helps me to avoid those false breakouts.

Maybe not all of them, but for most of the false breakouts I avoid looking at MACD because it often happens there’s a breakout, but MACD still didn’t change anything.

It’s still the same direction as it was.

This is an alarm signal for me or someone’s going to trick me. I’ll wait.

That’s why I use MACD as a kind of filter, maybe not a decisive thing, but as a filter.

I showed many times situations when I said…

“Okay guys, now we have an inside bar MACD still showing bullishness”

Now we wait for the breakout and if this breakout is followed by bearish MACD, this is the moment we can start selling.

But if you see a breakout and MACD is still bullish, forget about it.

It means that they are going to trick us.

They will pull higher.

It’s a strong trend.

So naked charts are very good. But the naked chart plus MACD is the best.

Rayner (49:23)

Awesome to hear that.

Let’s say we have our MACD.

I’ll just walk you through the scenario and maybe you can share your thought process so the listeners can kind of like, because we don’t have, we’re not sharing charts over here so it helps them better visualize your trading approach.

Let’s say MACD has multiple green bars and then boom, we have a red bar, meaning there is some selling pressure looking in the backend.

Then you’ll probably look for patterns that you’re familiar with like you talk about the inside bar, the engulfing pattern.

Let’s say you have a bearish engulfing pattern on the chart.

I guess that meets your second criteria so what happens next?

Dargo (49:58)

Let’s say that we are analyzing a bullish market.

There’s a bullish swing and I search; I’m watching the charts and I couldn’t find that MACD just turned to bearish.

Then I looked at the charts if maybe there was a pattern.

Those things are equal for me either change on the MACD or patterns on the charts and then normally the best setups for me when I see a pattern my favorite patterns are outside bars.

In case of an upswing of course, when I see a bearish engulfing pattern and I see that MACD didn’t change. I say a very good situation. I put it on my watchlist and waited for the breakout.

As long as I don’t see a breakout, even MACD will change to bearish, I still suspect that it could be a tricky situation.

Three assumptions must be met, all of them, not only two of them.

If I see breakups from a pattern, MACD is following the breakout, then I feel that it makes sense.

Sometimes specific instruments like gold where I also analyze the market on one-hour charts.

Because I found that on one-hour chart gold also likes to feel the assumptions of the strategy but on other instruments, I use only four hours.

I don’t take into consideration lower timeframes.

Because there are so many patterns on the lower timeframes.

In the five-minute timeframe, you can see twenty such patterns one works and one does not.

It’s useless.

I always say that in the case of patterns inside and outside bars, not all gold glitters. Not each pattern works.

Because people try to find shortcuts.

They buy computers they open an account with the broker and they start trading.

Because they know how to press the buttons to sell.

Then after some time, they find that there are so many things they should learn.

Education is a must.

Don’t believe that you have a beginner’s luck.

It can happen once or twice, but in the end, the knowledge comes and the knowledge means filtering setups.

Which may not work focusing on those best setups.

Don’t trade each pattern because it will not work.

Bearish engulfing must be on a swing high.

Bullish engulfing must be on a swing low.

If you find the bullish engulfing on a swing high it means that it will probably be a continuation, not a reversal pattern.

I think that practicing is very important.

You know 15 years of trading made me learn a lot.

I burnt many accounts before I started

I think that I started gaining money after four years of trading.

Rayner (53:56)

Beautiful.

Dargo (53:57)

For the last seven years, I didn’t have a losing year.

This is what I believe is a success.

Sometimes the wins were not big ones, but generally, I think now it’s the eighth year I’m closing with a profit in a row.

I have five accounts, to say the truth. I have a futures account where I don’t need a broker then.

This is different from the contracts for difference.

By the way, what is happening on the contracts for difference comes from the futures market.

Of course, we need to have the quotation from somewhere.

It’s not taken from the air but contracts are different I have three accounts on CDFs and one on the Polish stock market.

But this is the most speculated stock market in Europe.

The capitalization is so low that one big customer can change the quotation.

I have some stocks open on the Polish banks, which have no huge capitalization.

I have some shares from the Polish banks only.

Rayner (55:06)

Maybe just to take a step back and maybe just to continue off from the MACD.

Let’s say, we do some guidelines that they can go and research on their own.

Let’s say the MACD, let’s imagine it’s bullish…

Let’s put it… Let’s say… there’s a bearish engulfing pattern at a swing high.

MACD has now turned from green to red.

You mentioned that there’s a breakout of the bearish engulfing pattern.

Is there any definition that you call a breakout?

I think if I’m not wrong it’s like a close below the low of the engulfing pattern.

Would you call that a breakout looking at a closing price?

Dargo (55:43)

Yes, for me a breakout means breaking the low of the candle creating the pattern.

You mentioned a bearish engulfing pattern for me a breakout means that the candle closed outside.

But what I mean is closed means the candle must be finished.

It cannot be a breakout during the day if I analyze daily candles.

I need to wait till midnight before I can say that the breakout happened.

Because it might be so that the last four hours.

They will start pulling higher and they close in the range of the pattern.

Then there’s no breakout.

I would even call it a false breakout, which in the case of a false breakout, the market likes to move in the opposite direction with a double speed.

Because they catch some customers at the bottom and then…

Whoop…we go.

I always said that the market is doing its best to cheat us.

The market likes to be tricky and we might be prepared for any situation.

For me, a breakout means the candle is closed outside the candle.

It is over and a new candle is built

Then I can say so

Rayner (56:59)

Are you referring to the daily timeframe?

Dargo (57:00)

In the case of daily, I need to check this candle after midnight.

In the case of four-hour charts, it’s better because we have six candles per day.

It can happen.

I must say that I prefer trading on a four-hour chart because it happens quickly.

I mustn’t wait until the end of the day.

Let’s say after the US session is open.

I see…

“Okay candle closed outside and may see these falling”

I can join the market

Rayner (57:34)

Assuming that the pattern is formed in the four-hour timeframe. Did I get that right?

Let’s say you are looking for the breakout in the 4-hour time frame.

This is assuming that your candlestick pattern has formed in the 4-hour time frame.

Not the daily time frame

Dargo (57:54)

It depends because sometimes we have a pattern on a four-hour chart and I can trade it.

Then I checked the next day I saw.

“Whoa also the daily created a pattern because it happens that the pattern is built starting from one hour and then it grows”

You know it grows.

But if a pattern is built on a four-hour chart, I check on the four-hour candles

If it’s built on daily, I look at the daily so the definition would be that the breakout must happen from a pattern on the same timeframe.

If it’s on a daily, then a daily candle.

If it happens on a four-hour chart, it must be a four-hour candle.

Some people ask me…

“Oh, I see that this 15-minute candle just broke out”

I said…

“But it’s still 45 minutes to close one hour and it’s three hours and 45 minutes to close the four hours.”

It’s not so easy that a five-minute chart will break out.

“Oh, it’s the breakup now, of course, you can risk it depends”

What is your appetite for risk?

If you would like risky trading, you can start trading after they just touched.

You know after they do three peeps below the pattern.

It’s a breakout but so many times I was trapped in this that after one hour they were back in the pattern and then I was hoping that maybe they would break out at the end because MACDs was still not changing anything.

You can try to trade a breakout on a not-finished candle only if MACD confirmed the breakout already.

Then okay, the risk is not a big one that the candle will close again in the range.

Some people say that I’m a slow trader like a snail.

I never hurry in trading.

I always say there’s always another day.

There’s always another trade that can happen.

I say it’s like moving with a crowd.

If you go one step before the crowd, you can miss the moment when they turn around.

The same is true with trading. I rather go by the crowd, by the big boys.

Show them where should they go.

I rather go by the market not before the market even if I lose 20 pips, even if my entry is 20 30 pips later.

Then it could be the safety of the account.

We didn’t speak of course about money management here, but I think that everything starts from money management.

The best strategy won’t save you if you don’t properly manage the account.

If I would say that is the most important number in trading, because there are so many numbers, the efficiency, the profitability, the sharp ratio or risk to reward, there are many, many numbers in statistics.

For me the most important number is drawdown.

I feel if you can manage the drawdown, you will never lose.

Sometimes it can happen, but controlling the drawdown, in my opinion, of course, is my private opinion, people can have different, but I’m not looking at the numbers of how much percent I earned today or how much I lost today.

For me, it’s most important how big was my drawdown today.

How much I risked.

My maximum drawdown this year is 15%, which happened in one month only.

Normally I try to keep it below 10% because letting a drawdown go 15, 20, and then forget it, then it’s no sense.

If you trade with a thousand dollars, you can risk 60 percent.

Six hundred dollars I will survive, but if you trade with a hundred thousand dollars, would you risk sixty thousand?

Rayner (01:02:20)

Of course not. No for most people. Unless I’m a billionaire, maybe.

Dargo (01:02:25)

You know if someone can lose a hundred thousand dollars, it means that he’s a millionaire.

But I know people who don’t.

They’re not millionaires and they lose so much money because of not keeping the drawdown under control.

Rayner (01:02:45)

Agree.

Dargo (1:02:47)

Drawdown for me is the most important number

Rayner (01:02:53)

To carry on where we left off. Now we got the MACD, we’ve got a pattern, we have the breakdown.

I think the next question would be you know where would you then go to set your stop loss and your target?

Maybe you can expand a little bit more talking about your stops and your target.

Dargo (01:03:02)

Stop loss and targets in my system. Well, in case of stop loss,

My stop losses are always based on the patterns that I’m trading.

If I’m trading a pattern that is a size up to 100 pips.

I put my stop loss over the pattern.

Let’s say 10 pips higher than the pattern.

Let’s say that I’m trading an upswing and there’s a pattern on the top of the swing and I want to short it then my stop loss is over the pattern by about 10 pips.

In case the pattern is not bigger than 100 pips, of course, this is plus-minus.

It’s not a universal number but if the pattern is huge, let’s say…

On pound with yen, the pattern can have even 200 pips.

Then I put my stop loss over the breaking candle.

Why because if there’s a pattern and then comes a candle that begins in the pattern and is closing outside, it means that someone initiated a move, and someone made a decision, and it’s time to break out from the pattern.

In my opinion, it’s logical that putting a stop loss over the breaking candle means that you are over the price from which the market initiated the breakout.

It’s the level where there’s a strong selling area.

If I put 10, or 15 pips over the breaking candle, it means that if they break it, if they take my stop-loss, it means no more bearishness again.

They are joining the trend.

Because the candles are showing us what’s happening.

If I see a breaking candle starting inside the pattern and then closing outside, it means that a decision was made.

Who made the decision? Sellers.

Where did they make the decision?

Where the breaking candle started.

This is the way I understand the market.

The market is always between buyers and sellers, who are stronger.

At that moment, sellers were stronger.

If I put my stop loss over the entry price, it means that I put it in a safe area in case they go over this breaking candle and take my stop loss.

It means that it was the best I could do.

Because no more selling it’s time to go with them.

So, this is where I put my stop loss regarding the take profit.

There’s no universal prescription let’s say because it depends on many things.

One of those is that…

There was a guy whose name was Bulkowski.

Mr. Bulkowski was a man who was making statistics on different patterns

He was testing he was testing thousands and thousands of patterns I read that he tested 3,000 head and shoulders pattern to find how much the market breaks out from a Head and shoulders pattern.

He checked that over 70% of the patterns broke down.

I mean the head and shoulders and they gained 70% of the size of the pattern.

Usually, we say…

“Oh, head and shoulders one-to-one the size of the pattern the size of the breakup”

Mr. Bulkowski tested 3,000 and said…

“No, it’s only 70% of the size”

This is theory.

He also tested breakouts from outside bars and bullish and bearish engulfing patterns.

He said that in case the breakout is at the size of the pattern, he treats this pattern as a good one.

It means that it worked.

He tested also a few thousand of those patterns and he says…

“The probability that aftermarket breaks out from the pattern and makes a move of the size of the pattern is 72%”

I believe that when I’m trading, let’s say a sell from a pattern, my target should be at least at the size of the pattern.

But this is theory.

Sometimes situation doesn’t let me have such a big take profit.

It depends.

Normally I use the demand and supply zones if I see that when I start selling and I see that there’s a demand zone close to the pattern.

My first target is this demand zone.

I don’t try to take targets below the demand zone because it’s nearly obvious that they will stop in the demand zone.

They make a correction they come back to the pattern then they try again.

The market doesn’t fall just like a stone it usually wonders a bit up and a bit down.

It’s moving in a swing.

The definition of a stop loss is either over the pattern if it’s only 100 pips or less.

But if it’s more than 100 people say 150-200 then I put my stop loss over the breaking candle in case of a call order.

Rayner (01:08:20)

Got it.

That was concise. I love it.

Very clear.

At least I understand, hopefully those listening and watching can visualize where you are coming from.

Also, you mentioned supply and demand.

Let’s touch a little bit on that one because I think now you have given us a very high-level overview, plus a detailed explanation of your price action and MACD trading strategy.

Maybe now we can talk a little bit about supply and demand.

Because I know that you mentioned earlier the OPOS. What’s the full acronym for OPOS?

Dargo (01:09:00)

Only pending orders strategy.

Rayner (01:09:07)

There we have it.

The names you give are really interesting.

Let’s talk a little bit about that.

Before we talk about the OPOS, I think that strategy is very useful for those who have a full-time job, right?

Because you don’t need to be in front of the screen all day.

You all take on the difference between support and resistance and supply and demand.

I believe you feel that there’s a difference between the two.

Maybe you can share your take on it.

Dargo (01:09:37)

Yeah, I always say that before.

Sometimes I make some webinars and people ask me about the support and resistance to supply and demand.

I always say that my approach to support and resistance and supply and demand might be different from this.

What you already learned because many people say that support and resistance are the same as supply and demand. They don’t see the difference.

Because sometimes it is in the same place. But to say the truth, it’s not the same, at least in my mind, it is what I understand.

I understand support and resistance are levels that are technically created by the market.

Sometimes it happens that because of some news, the market starts to grow from a place.

But when the market comes back to those levels, it mustn’t react again because there’ll be no more news.

Let’s say there were payrolls and payrolls pushed the price from let’s say gold started from 1900 and started growing to 1950.

When the price comes back to 1900, it doesn’t mean that once again, it will go because there’ll be no more payrolls that day.

This is why support and resistance levels, I mainly support those levels, horizontal levels only, I’m very suspicious of those levels, the Supply and demand zones.

This is something, it’s a different story.

To make the market make a big move, make a big upswing, you need some forces to do it.

Those are buyers, okay?

Those are big, I call them big boys, sharks of the market.

Those are big banks and hedge funds.

Those institutions operate with such huge amounts of money that we cannot even imagine.

Those are billions and billions, and if they can change the price on the market, we should follow the big boys.

We cannot fight with them.

If someone started buying gold at 19,000 and is pushing the price higher and higher and higher without any news, just because it started growing, we can be sure that at the level of 19,000, there is more money lying.

Why?

Because if they would like to buy all the gold they want to buy, they would spoil the market.

In short in seconds, the gold price would go so high.

They couldn’t realize the mark that they ordered once so they divided the orders into small chunks.

Let’s say…

They want to buy two tons of gold. Okay,

They buy one ton at 19,000 wait for the price to come back and then buy another 250 kilos or another 250 kilos.

This is the way they must divide the orders into chunks because in other cases putting all.

Then the last kilo they will buy is $2,000 that’s why not to disturb the market.

They divide it to chance and those I call them block orders or the blocks.

This is the way the market is moving.

I’m using a platform Ninja Trader and I have some volumes from the real market from the futures market and I see those blocks

Of course, this is different trading.

It’s nothing compared with what we see on our MetaTrader platforms or trading view.

But in the end, everything comes to the same.

There are some areas of interest where there are buyers and there are some areas of interest where there are sellers.

I always say that the demand zone is created by the buyers

If the price comes back to that area, the probability that the market will bounce back from it, will reflect, and again initiate buying is very high.

That’s why I believe in those zones.

When I see that such a zone was created.

For example, let’s say that it was $1 with Yen and the price went 150, 200, and 300 pips higher from a zone.

When the market is slowly coming down to that zone.

I can put a pending order over this demand zone expecting that when they hit it, there will be a once more in the reflection.

What’s good about this is that I can put in a pending order close my computer and go on holiday.

In case the price comes back to that level, they will initiate my trade.

I don’t lose an opportunity.

That’s why pending orders are very good for people who would like to trade as a hobby.

They have maybe two hours per day for trading.

They analyze the market, they look where are the supply and demand zones, which could be activated the next day, and they put a pending order.

My idea is if I want to buy in a demand zone, I put my stop loss below the demand zone and put my target at the same distance as my stop loss, one-to-one.

The statistics show that if the market is coming close to a level, to a zone, it often bounces back and then breaks it through directly.

So, for example, have a level of $19,000 which is a level of demand zone.

The probability that the zone will be broken straight away is only a 30%-70% chance that it will bounce back and this is true If you look at the levels mainly the levels are attacked two or three times before they are broken.

If you find a level and you say…

“Yeah, this is a strong level because the market created it some days/weeks/months ago”

 If there was a huge reflection next time they’ll do it once more maybe not the same size, but at least some part.

This is a strategy I call it for working people because the statistics are helping us in this because statistics say before breaking, there will be at least one reflection.

Of course, the reason why this is almost created by big boys, big whales, and sharks of the market. They won’t let the price just go through.

It’s all especially when it’s very important to analyze the zones and find the best ones and it’s not so difficult the best ones are those from which you had the biggest move.

When you look at the chart, you can open a daily chart and say…

 And then they started falling in case they came back to that level.

This level will work once more at least once, and then you can plan.

Rayner (01:17:14)

From what I’m hearing.

Let’s talk about supply and demand.

How it mainly differs from support and resistance is that support and resistance could be just created from news releases right like maybe NFP.

You know CPI whatsoever where supply and demand is more of institutional orders right they won’t want to put in like a billion dollars to buy gold at once.

Because the gold price will spike so they will have multiple orders maybe instead of a billion be split up into like 200 million, 200 million, 200 million something along those lines.

Earlier you mentioned that ninja traders can see the volume profile to differentiate which zones, and which supply demand zones to trade off.

Well, let’s say someone who doesn’t have that tool or software.

Based on the charts, what will be the key things for them to look out for?

I think earlier you briefly mentioned the magnitude of the move, to kind of like filter out which zones that are better compared to the rest.

Is there anything else to add on top of it?

Like, how do we differentiate good zones from bad zones?

Dargo (01:18:17)

Well, of course, the distance on which the market moved from the zone is very important because it shows the strength of the buyer or seller.

I made an indicator for those zones.

I have an indicator that is drawing those zones for me.

I found the indicator many years ago. I tried to use it, but it was giving some funny results and I worked on this indicator with my friend, it took us a few months before we found the best settings.

These are based of course on candlestick patterns, not on the volume, because connecting it with the volume, would cost a lot of money.

It would be an indicator that would work for some people. This is an indicator based more on technical analysis, but it gives very reliable results. I must say that.

Just to say it straightly frankly the best zones are those which are on the top and the bottom of the chart.

Just to make it easy because those zones are the oldest.  

They give us the biggest range between one and second because if we have zones very close to each other I have a different strategy if I see zones in which the distance between those zones is 20 or 30 pips.

Then I understand that this is an area of consolidation.

Then I trade breakouts from those zones, not reflections, but breakouts.

It means that if they are between two zones and prices moving, you know, it’s trapped and then once they break out, I put a pending order.

But it’s a buy stop or sell stop. It means that it’s going with the flow not against because normally when you say the price is falling to a demand zone and you want to buy.

I’m trading a bit against the flow but in the case of zones that are close to each other, I put the sell stop or buy stop, and then if they break out from that range usually, they travel to another zone.

Which is in using those zones it’s easier for me to determine where should be my stop loss.

Because my take profit will be always on the closest, below the closest zone, or over the closest zone if I sell.

So, we can use this strategy with the flow or against the depends.

There are many factors in deciding where I put my pending order, but I think that the best way is to practice, open a demo account, and practice.

This indicator is also on your platform, it’s available for free absolutely in this ultimate price action.

Rayner (01:21:18)

Let’s say what about zones where I think you call it order blocks.

Where the market didn’t just come to a zone and immediately take off.

Instead, it comes to maybe a level or zone and area whatsoever, and it starts to consolidate maybe 6-10 bars before it makes a move, right?

Those look like mini, I guess, kind of like a consolidation, a mini consolidation on the chart.

 What’s your take on such a price action that you see on such zones on the chart?

 

Dargo (01:21:51)

You mean that the price is coming to a zone, it’s not breaking and it’s not reflecting.

It’s just moving on the zone in small ranges.

Those are the worst things because I usually feel that if there’s no reaction and there’s no bounce back, it means that it will be broken.

Because it means that there’s no more money in that zone which can push the price back.

It could be a signal that the zone is going to vanish shortly because you know everything is money.

If there’s no money on the order block. It means that the order block will fail

Rayner (01:22:34)

Would there be instances where let’s say…

You already have your order set, your limit orders, and your stop loss orders, and then that happens at the zone where it hasn’t hit your stop loss yet.

Would there be a chance that you just prematurely exit the trade, or would you rather let it hit your stop loss and then see what happens next?

Dargo (01:22:51)

Well, it depends.

Once more, it depends on the lifestyle of a trader.

If he’s able to control the trades, even if he’s at work.

Let’s say…

“He’s working in the office and he has a break”

He can take a look at the phone and say…

“Wow, there’s no reaction on this one, I’ll close it”

But some people cannot do it.

A driver of a car, a bus driver cannot control his charge during work.

Someone who is working in a factory? He must be focused on his work.

He cannot look at the phone, so those people are in a bit worse situation.

That’s why in my opinion.

Each pending order must have a stop-loss and must have a take profit because if there’s only a small reflection maybe they will just hit you or take profit and it’s okay.

But if they go after some period when you couldn’t control it and you see them going through your zone and you haven’t your stop loss.

You are lost.

In case of pending orders, you need to have a stop loss and take profit.

It’s obligatory.

You cannot risk opening a pending order without putting a stop loss and taking profit because you never know how the market will behave.

That’s why and it shouldn’t be too greedy.

You should then give your take profits huge levels.

It’s enough that if they’ll take profits as the size of a zone, then it’s okay.

Grittiness is something that is a big problem within traders.

We want more and more.

I have a saying that the biggest reason that people fail in trading is a lack of patience.

This is something that we know “Fear of missing out”

“Oh, I must go I must enter two days already I’m looking at the chance three hours and I didn’t open a trade”

“Wow. I must open something”

Rayner (01:25:37)

Short and sweet, right?

Fantastic.

I’m hearing a lot about having a one-to-one take profit since I think you’re primarily a swing trader.

So, are there instances where maybe you don’t aim for a one-to-one, maybe you risk a dollar and maybe due to price action or whatever, you take off $1 and you end up getting 70 cents or 80 cents?

Are there instances like that?

Where do you go for a less than one-to-one?

Dargo (01:26:01)

Yes…

Of course, because I can afford it myself.

I have a high probability of winners as I mentioned I have even one account where I have 95 winners.

But this is a scalping strategy which is only one month old.

So, it’s nothing to say.

But the oldest of all the accounts, two-three years old accounts.

They have a probability of about 80-85 percent.

I can afford myself have a lower risk to reward and I still am profitable.

I must say that maybe I shouldn’t say it out loud to people who are just starting trading, but guys, I’m not so much focused on risk to reward.

I’m more focused on efficiency, on probability.

Rayner (01:26:51)

There are two sides to the coin.

I think one thing that a lot of new traders, which I feel for, get so caught up with…

“Oh, I must have a minimum of a one to two risk to reward, one to three risk to reward”

This way I have a 50%, 40% winning rate, and I’ll still be profitable.

But on the other side of the equation, if a trader who’s like you has an 80-85% winning rate, you don’t need a one-to-one risk to reward to make money.

You can even go to a dollar and you make back 80 cents, or even 70 cents.

I think in the long run, you’ll still be profitable.

So there are two sides to the coin, which I feel like.

All traders should understand your risk to reward and your winning rate, they are both like two sides of the same coin.

You must find the right balance, right?

Dargo (01:27:28)

Yeah, there are two ways, either risk to reward or efficiency.

I choose efficiency, especially when I’m scalping.

I don’t look at the risk to reward. I just want to close a profitable trade.

That’s when I see that things are going against me.

I’m just closing without thinking about it.

But generally, the account, which one of the accounts is public, so people can check it, can see it.

It’s a moderate account.

It’s an account with an amount of money, which is maybe an average capital.

It’s not something huge.

It’s not something very small.

It’s just an average.

That’s why I’m showing it because I believe that this is a level that is available for traders who want to be professional traders.

At least start from this.

It’s such an amount.

When I looked at my risk-to-reward ratio, generally from a thousand trades, it’s one and a half.

It means that for one dollar which I risk, I have and one-and-a-half-dollar return.

I have some trades where there’s one to forty on a profit.

No, I risked one dollar and got forty.

But there are also some trades where I risked one dollar and I got only 20 cents.

I don’t I’m not so much focused on risk to reward. I had a session with my Polish friends on Tuesday and I said there was a question.

Wow, you risked a hundred pips and you closed 25 on there.

I said…

“But I closed 25 on a profit if I wouldn’t close it on 25. I would be losing 25 two hours later”

What is better keeping to the risk-reward or just taking the money from the table?

I don’t stick to the risk-reward so much, especially since I have different volumes.

I sometimes open half a lot, sometimes I open 0.1 lot.

It’s not so easy to say one-to-one or one-to-two.

Sometimes I earn $20 and sometimes I earn $5.

How can we compare it with risk reward? It makes no sense to me.

Rayner (01:29:47)

Oh yeah…

By the way, Dargo,

The time now is about one and a half hours.

As mentioned earlier, I like to do this just to check, to know how are you feeling.

Do you still want to carry on with a few more questions or do you prefer to just kind of close it up?

If we can talk another time, what’s your take on this?

Maybe I’ll just ask you a few more questions before we sum up today’s session.

I think early you talk about news, you said you’re primarily 70 percent a technical trader, but you’re still aware of the fundamental news that’s going on around the world.

What’s your take on the news when you’re trading?

How do you approach the news?

Dargo (01:30:20)

Generally, Sunday evening or Monday morning.

I analyze the whole week; five days and I check for the most important events that can happen this week.

For example, if I see that on Thursday, the Bank of England will make an interest rate decision, or that they will make because of Thursdays.

I call them super Thursdays for Bank of England because the Bank of England always has a few things at once happening on Thursdays.

Let’s say that there’ll be an interest rate decision half an hour before we have the CPI report from Great Britain.

I know that trading the pound this week is risky.

If I plan to trade on pound, I don’t do it on Wednesdays, a day before the main events.

When I’m scalping, it’s not a problem.

When I’m scalping, I’m not looking at the news.

But mainly I’m a swing trader.

If I plan to open a position on Pound, I need to know that there’s nothing that can disturb this technical analysis.

Because of technical analysis, you can throw it in the trash bin after the news very often.

I hate having a webinar just before the news.

People asking me…

“Okay, what’s your position on Euro USD?”

I say…

“Well, I can tell you many things today. I can say you wonderful things. I can take you a star from the sky, but let’s wait for the ECB meeting”

Then we can speak about it realistically because, after all that I said today, tomorrow after the ECB decision, you can throw it in the trash bin.

This is why I look at the economic calendar, and I try to avoid trading pairs where there could be some interesting events and some volatile events.

For example, last Friday, I was trading the EURCAD.

I was shorting it and I showed why.

I was sure that there’s an engulfing pattern, there’s a breakout, and MACD turns bearish.

It’s a good opportunity.

I put it on the Telegram channel. Probably you saw it.

I said…

“I’m shorting it”

But then I looked at the calendar and I said…

“Whoa, Canadian bank, Canada will make a decision or something. No, it was retail sales from Canada on the US market opening”

Guys, if the data are positive, the Canadian dollar will get strong.

This will be something which will be in my favor.

But if the retail sales are bad.

I’ll close my trade as quickly as possible.

Luckily, the Canadian retail sales were good and I got 70 pips on a profit that day.

Why shouldn’t it?

It could have happened absolutely in a different way.

I could have closed minus 70 because they would go against me.

So, technical analysis is okay if there are not very important events.

But if there are very important events, we need to consider this.

But, you know, it would be so easy that if, let’s say…

Inflation up, dollar down, inflation down, dollar up.

It’s not always that way.

Sometimes market likes to surprise us and there’s so irrational market reaction that we just have such eyes.

What’s going on?

Deflation went down and the dollar went down, why?

That’s why it’s better not to avoid trading before the news.

We never know what they plan to do so but of course, I mean the news which is marked with red.

I’m using the calendar from my ethics book.

There’s a very nice clear calendar and then I see what’s going on very quickly because they mark with red all those important things but sometimes even payroll might not cause any volatility.

If let’s say in the same week we have on Wednesday, Fed decision about interest rates and two days later we have payrolls.

Those payrolls had no impact that day because all the decisions were made by the Fed on Wednesday.

Next Fed meeting is six weeks later and the payrolls from Friday make no sense because they already knew the data.

I don’t believe that the Fed doesn’t know what’s happening with payrolls if they are deciding about the monetary policy.

We, retail sales, the traders will know it on Friday, but they already knew it on Wednesday.

Then I know…

“Okay, the payrolls won’t be an important event”

 We mustn’t consider it when we are trading some.

Rayner (01:35:10)

Got it. Nice.

I like how you shared that you pay attention to the news.

More for a risk management perspective, to know when to exit a position, to know when to stay out of the market so you don’t get caught from the news release.

The next thing I like to hear from you is that you’ve been trading for so many years, definitely longer than me.

I like to hear what some of the biggest challenges that you had to overcome and what you learned from them.

Dargo (1:35:37)

The challenges… I think that the biggest challenge is ourselves.

The biggest opponent in trading is me. It means that we have to overcome the weakness, such as greed, ignorance, and weak will.

Above everything, the most important thing is sticking to the rules of the strategy.

You know how difficult it is to be consistent.

It’s how difficult it is to keep everything in hand, the emotions.

We see something which looks very interesting.

“Oh, I think that the market just moved because there is some data market is moving. Let’s trade it”

But then you must cool down and say…

“Well, MACD is giving me no hint and there’s no breakout”

There’s no pattern.

Why should I trade it?

Let’s cool down and be patient.

Emotional trading is something that gave me the most losses ever.

I had a big loss in 2015 and I will remember it to the end of my life because it was not only a huge loss but it was also a loss because of my stupid entry.

If I looked at this market in a cool way, I would never open a trade on it and I was so focused on this that everyone is buying.

I’ll buy it also and I bought it on the absolute top of the chart.

I only saw my account vanishing in after three or four days.

I lost everything so from that moment on everything changed in my trading

I must say that it was 2015, which changed my approach to the market.

 I said…

“Okay, save your capital. Don’t let the market take more than 15% of the account at once”

This is the maximum on all trades, but one trade cannot lose more than 5%.

I started sticking to that rule.

Everything changed but I think the biggest obstacle is ourselves.

Our strong idea is a weak will that we are not keeping to the rules.

We are not keeping to today in the morning you say yourself…

“Okay from today, I will never let my trade go below two percent”

In the evening we check off minus five your will is not working because you know there are some people talented, they have special character for trading.

Those people make business people earn money on the markets but this is a small percentage.

Maybe two percent of the traders are just because they have this character of a warrior, but most of us are normal people and we need to train those your character

I remember my beginnings.

When I look at how I started, I am surprised that I’m still a trader because normally, this is something crazy when I look at how I was trading,

I was losing account after account, three years just spending money, all free money for losing and losing.

After three years, I should quit the work at all.

Someone gave me a hand and said…

“Wow, what are you doing guy?”

Do you know what’s outside the bar?

Do you know what’s inside?

I say well…

“Those are simple things; those are just basic things”

I know all about them.

What you would do with this one?

Well, I would trade it.

Are you sure this is a good, you know step by step?

I had a mentor who helped me for six months and everything changed.

Then I started profiting and this was a kind of you know line in the sand.

But I think that what I could advise the people who start trading, those traders who are just beginning, or maybe even they feel they’re experienced but they’re still losing.

First thing, keep an eye on the drawdown.

Absolutely the most important number.

Don’t look at how much you earn, look at how much you lose.

This is the first thing and another thing, which I believe is also a big problem, people believe in those things that they see on the internet.

They see hundreds of percent of people gaining hundreds and thousands of dollars in one day, getting rich in seconds.

People believe that if you earn 5% a month, you are useless.

I made 5% only on one trade. The question is how long?

Mr. Warren Buffett, the most known trader, investor, the famous investor, and the most famous, has this company, Berkshire Hathaway Fund.

He earns about 24% a year from 1964 until now, every year.

His average income is 24% per year.

He’s known as the best investor ever.

How can you be better than Mr. Warren Buffett and you say…

“Okay, I’ll earn 100% per month”

It’s very important to have realistic targets.

Don’t believe that you will be a millionaire in one week or one month.

It’s a long way.

It’s climbing step by step, losing sometimes on the way, but don’t be in a hurry to become a millionaire.

It won’t work, because people who want to make fast money, quickly lose both capital and enthusiasm.

That’s the end of the story.

Rayner (01:41:57)

Earlier you mentioned that there’s a mentor who helped you for 6 months, so does your mentor trade in a similar manner as you?

Dargo (01:42:03)

Well, it was a person who was a technical analyst.

He wasn’t interested in fundamentals only technical analysis.

It was a good approach to the marketing.

Let’s say…

“He started showing me those things in 2012, and 2013”

Those things work, but now.

I found that fundamental analysis also is important, especially in those difficult times, you know, the virus, coronavirus, the pandemic changed a lot, inflation came here, and now it’s very important.

I believe that the news is important.

That’s why I combine.

He was only a technical analyst, and he had a heart stroke and he died a few years ago.

He was an old guy.

When I contacted him, he was 70 years old.

He was not a full-time trader.

He just traded as a hobby and he had a lot of free time.

He was part of our family.

Far families colligated many generations back and he was mainly a stock trader,

But when he found out about Forex, he heard from me that I was losing the 12th account in a row.

He said…

“Okay show me what you are doing”

He just…

“Oh, my goodness. What are you doing?”

He changed my attitude to the market and now when I try to help some traders, I have the same attitude as he had slowly, basics, simple things, not complicated.

He taught me that indicators are helpful, but if you have too many indicators, it’s a problem.

He said…

“Okay, you have 10 indicators on your chart, you believe that it will help you”

Put 10 people before yourself and ask them a question.

What will you do if three of them will say…

Yes.

Three of them will say…

No.

Four of them will say…

“We don’t know”

Will it help you to make a decision?

You ask them, what kind of shirt should I put on when I’m going to a wedding?

You have different opinions, you get lost.

Isn’t it better just to take two people and one will say…

This one and this one?

He used some samples from life and he transferred them to trading many times.

Very simple answers.

Then I learned what means an objective strategy.

What is a discretionary strategy and what is an objective strategy?

Discretionary strategy is based on your feelings, you encourage yourself because…

“Oh, I’m a genius, I will know the best”

This is a discretionary.

You make the decisions because you believe in this, what you know.

Objective strategy is you just believe in facts.

What happens really?

That’s why I hate strategies which are where you should decide about entering on your feelings, not on the facts.

This is the difference.

Rayner (01:45:40)

I just want to backtrack a little bit because I think I might have missed out on these few questions earlier.

Earlier when you were talking about OPOS’s trading strategy, where pretty much the strategy for people who are working full-time.

Trading off our supply demand zones, right?

You mentioned you can use limit orders, right?

You mentioned your target is usually about one-to-one.

I’m not sure if I asked you this earlier.

What about the stop loss?

Where usually do you set your stop loss?

Let’s say you’re looking to buy off a demand zone.

Where would your limit order be and where would your stop loss be?

Dargo (01:46:12)

Well, if I plan to buy in a demand zone and I see that this demand zone gave before a huge move, it is a signal that some buyers are there.

The demand is huge in that zone.

I put my entry a few pips over the zone because if I base it on an indicator, I must always take into consideration that the indicator is a mechanism. It’s an algorithm.

Sometimes it can vary a bit. It won’t give me a hundred percent level.

But I must say that many times they just touch it and bounce back.

So, the indicator is perfect.

I must say that I tried some other indicators, which have no value compared to this one.

I usually put five pips over the zone at entry and my stop loss is two or three pips below the zone.

This is the way I put it and this is if the zone is let’s say 20 pips.

Then my stop was about 30 pips maybe and this is usually the target I would like to have.

But each situation is a bit different.

There’s no universal prescription because if you look at the context and you see on the left, I mean the history that there was a spike up from some level.

I believe that it has become resistant now, so I will put my take profit below that spike because, so I will say…

“This way, stop losses are easier for me to put the stop loss than the take profit here”

Rayner (01:47:54)

Because take profit, you still have to consider the price structure on the market.

Where’s the swing high, where’s the resistance, etc.?

Then you kind of adjust accordingly.

Dargo (01:48:03)

Yeah, maybe there’s support and resistance over somewhere, which could be an obstacle to the growth.

Rayner (01:48:07)

Let’s close it up with a few questions because you’ve been so patient and kind with us.

I like the way you educate traders.

There’s a lot of sense of calm, experience, wisdom, and it’s not very rushed.

It’s very calm. That’s the demeanor that I sense from you when you explain concepts and strategies.

Just closing questions for fun, right?

What are you most excited about right now whether is it professionally or personally?

Dargo (01:48:43)

I’m preparing for the World Championships in swimming which will be in Doha, Qatar, in March.

This is my target at the moment.

Because I checked my results from winter and I see that I can have a chance for a final.

This is my target.

I’m training hardly three times per week.

I plan to change it to four times a week.

In the case of professional things, compared with something to do with trading, I would like to close the year with 100% profit.

I’m at the moment 90.

Rayner (01:49:30)

Nice.

Dargo (01:49:31)

I remember 97% on one account.

On other accounts, I’m about 85%.

Maybe I’ll not manage to put up to 100%.

But my plan is just to do what I’m doing until now.

I don’t want the numbers to put some pressure on me, but I’m very close to 100% in December.

This is my, let’s say target for business.

I’m taking part in your program which is something new for me.

I like it very much and I hope that I will have more.

I can take more time and spend more time helping the traders with some ideas.

Generally, I like new things.

I just finished the Corporation with one company

After two years contract and I’m happy that we started some cooperation here.

Maybe it’s something not big, but I see that some traders like this.

My entries, my analysis, it’s always fine to see something new, especially that now I contact with people in the second part of the world, far away from Europe.

The contract I had for the last two years was with people from Europe mainly from Poland.

So, I’ve always been open to any kind of cooperation when I can see the effects.

When I see someone write back…

“Oh, I started gaining now after so many years of losing”

It’s always a big reward for me to hear something like this

Rayner (01:51:24)

I’m happy to hear that.

I was about to ask you earlier about the swimming.

You’re aiming for the next competition in March in Qatar and three, four times a week training.

Do you have a coach or is it you’re just on your own following the process?

Dargo (01:51:40)

I must say that my coach is the one here.

This is my coach.

The timer.

I have training programs which I write down for three months ahead and I’m just following those things connect.

This is a Garmin Watch which I have entry so I can check every interval I swim.

I check the times I change the pulls.

The pressure is everything so, you know I go to the doctor every three months to control myself.

What is the blood?

How many red cells do I have everything, like I did when I was a professional Swimmer?

Now I’m just repeating this thing because you know at my age It’s very important to control those things like pressure, like blood consistency.

You cannot do it just because you like it, because even for people who are 40 years old, they also need to control themselves.

We are not programmed to live forever, I would say, in this way.

Swimming is a kind of, I would say escape from trading.

Because if you trade too much, it doesn’t give good results.

I know that you need to find a balance between fun, sports, and work.

Even if I’m not going to a swimming pool, I’m riding a bike.

I make per year about 3000 km on my bike.

But I bike only in the forest, not on the roads because it’s not so nice to go on the road and rather biking in the forests.

I would say it’s a more cross-biking.

When I come back from training from a workout.

I have a fresh view of the markets and this is what I saw in the morning after I came back from the swimming pool, I say…

“Oh, now I have a clearer situation”

In my opinion, the first thing is you need to be patient.

If you didn’t enter a trade because you were too late, don’t try to chase the running train.

Wait for them.

There’ll be another opportunity.

There are so many instruments.

If you forgot or you didn’t manage to open a trade on EURUSD, maybe there’ll be an opportunity on gold or maybe on the pound.

Don’t be in a hurry.

Don’t try to enter everything you see.

Then emotional trading is the worst thing we can have.

Rayner (01:54:38)

I’m seeing a lot of parallels between competitive swimming and trading.

It’s a lot about the process.

You have your routine set up for the next few months.

You’re just following the process and whatever outcome happens, I believe you will handle it.

Whether you win or you don’t win, your mindset is geared towards just becoming better every day of your life, whether you’re trading or swimming.

Is there anything else that you would like to add or any questions that you wish that I asked you that I didn’t have a chance to ask you earlier?

Dargo (01:55:08)

Well, I think that we spoke about very various things.

What I would say.

I could give a piece of advice if I’m the proper person to give advice, I don’t know.

But for sure guys, when you are trading, remember about drawdown.

Believe me, if you keep the drawdown under control, everything will go well.

Don’t let your trades be losing for dozens of percent, I don’t say that there’s a rule of two percent a day or one percent a day, one percent on a trade.

No…

You need to have rules that fit your character, if you like adrenaline, if you like emotions, let it be five percent.

But then keep up to this five percent, It doesn’t mean that if you allow yourself to lose five percent, you will lose also ten and say…

“Okay It’s only five percent more”

No.

If you have rules, stick to them. If you stick to the rules, you will win.

Rayner (01:56:10)

Awesome.

Where can the audience find and connect with you if they want to connect with you?

I believe you’re on Facebook.

Do you want to share what’s your handle on Facebook?

Dargo (01:56:20)

Yeah, I have a Facebook of course.

I’m a language person, so I have a Facebook in Polish but I also have a group trading group on Facebook called “Trading Price Action Patterns”

You’ll find it and that’s about 40,000 people at the moment on this group.

Let’s say that active people are fewer, maybe thousands of them are active.

I promote the trading price action patterns.

So, no expert advisors, no hundreds of indicators only the price action and the MACD

Rayner (01:57:09)

Just the MACD. Awesome.

Thank you so much, Dargo.

It’s been a great pleasure speaking with you.

I love it.

Thank you once again for your time.

Thank you for going through sharing your trading methodology, breaking down your price action plus a MACD trading strategy, plus the OPOS trading strategy for those who are working full time.

Plus, your competitive swimming, the thought process, and many available.

I would say, live lessons that can be applied to training as well.

I think you shared that quite a bit in today’s conversation as well.

I appreciate you for that. Thank you, Dargo.

Dargo (01:57:43)

Thank you. I’m very happy that I could have this interview with you or this podcast.

I hope that people will like it. Thank you.

Rayner (01:57:56)

Thank you, Dargo.