Brief Summary
This video features an interview with Capelo, a successful trader who passed the Trader Pool evaluation on his first attempt. He shares his strategy of shorting small-cap stocks, focusing on identifying the "point of no return" and using the first red candle as a timing entry. Capelo emphasises the importance of mastering one side of the market before attempting to trade both long and short positions. He also discusses the challenges of oversizing and the need for a gradual approach to increasing trade sizes.
- Capelo passed the Trader Pool evaluation on his first attempt by shorting small-cap stocks.
- He focuses on identifying the "point of no return" and uses the first red candle as a timing entry.
- Capelo advises mastering one side of the market before trading both long and short positions.
- He learned a lesson about the dangers of oversizing after losing some profits in May.
Capelo interview highlight
The interviewer introduces Capelo, a trader from Spain with a large community and significant trading experience. Capelo successfully passed the Trader Pool evaluation on his first attempt, a rare achievement. The interview aims to explore Capelo's strategies and insights, particularly his approach to trading and how he achieved success so quickly.
Capelo, funded on first attempt
Capelo explains that his success comes from being a patient short seller, waiting for the right moment to strike. He focuses on stocks that gap up on the first day and then waits for what he calls the "point of no return". He uses trade review software to practice and refine his strategy, focusing on getting the best possible price.
Trading strategy: Shorting Small Caps
Capelo reveals his strategy involves waiting for the first sign of weakness, typically the first significant red candle after a substantial run-up. He avoids trades after 11 a.m. and prefers pre-market trading. Capelo believes having an edge is crucial, and he finds his edge in shorting small-cap stocks, which tend to decline eventually. He aims to enter at a good price, remain patient, and close his trades near the market close, around 9:30 or 10:00.
Timing entries: First Red Candle
Capelo clarifies that while most of his trades occur during pre-market hours, opportunities can arise during regular trading hours as well. He initially experimented with futures and forex but found greater success focusing on small-cap stocks. He believes it's easier to find an edge in stocks compared to forex, where intraday profitability is challenging. He shares that he turned $1,500 into $32,000 in a month using his strategy.
Stocks vs. Forex/Futures
The stock market offers numerous opportunities due to the vast number of symbols available for trading, unlike the limited options in forex or futures. Capelo confirms that Trader Pool provides access to the stocks he needs for his strategy. He highlights that the variety of stocks allows traders to implement diverse strategies.
Dashboard and performance metrics
The interviewer shares Capelo's Trader Pool dashboard, showing his progress on the Flex 50K account. Capelo had a somewhat rocky start but then found his rhythm and achieved his profit target while staying within the rules. His success rate is 57% with a 2.2 risk-reward ratio, primarily shorting small-cap stocks.
Challenges with long trades
Capelo admits that he finds it challenging to trade long positions. He often perceives breakouts as potential failed breakouts, leading him to enter long positions at the worst possible prices. He prefers to short at those levels instead. However, he sometimes attempts small scalps on the long side to avoid missing opportunities, acknowledging that stocks can sometimes experience massive upward movements.
Advice for new traders: Master One Side
Capelo advises new traders to master one side of the market before attempting to trade both long and short positions simultaneously. He believes expertise in both areas is required for success. He notes that the small-cap market operates independently of broader market trends. While overall market downturns may reduce liquidity, opportunities still exist.
Lessons from oversizing in May
Capelo plans to maintain his strategy in the funded account, honouring his rules and avoiding over-exposure to volatile stocks. He aims to avoid using excessive size, recalling how he lost some of his April profits in May due to oversizing. Despite the trades being fundamentally sound, the increased size led to significant losses from just a few bad trades. He emphasises the importance of gradually increasing trade sizes to adjust psychologically and manage risk effectively.
Future goals with funded account
Capelo acknowledges that the market humbled him, teaching him the importance of not moving too quickly. He aims to make a consistent profit of £4,000 to £10,000 per month with the £50,000 funded account. The interviewer congratulates Capelo on his achievements and invites him to share his payout process in a future video.
