Simplicity: 4 states + the 4-second rule

The height of cultivation is simplicity

He quotes Bruce Lee: tune out the noise and look at what the chart is doing. A simple read isn't worthless. People think complexity is where the edge is, but "a wise man hides a leaf in the forest".

▶ Foundation 0:21 ▶ 4-Second Rule 0:41 ▶ 4-Second Rule 15:04 both

Analysis is easy. Execution is the job.

95% of traders lose, and every one of them has an analysis. Any analysis is just a long way of saying "up or down". What matters is that you actually trade the analysis you made. "You cannot borrow conviction." He puts TA at 5–10% of winning and the rest at discipline and psychology.

▶ Foundation 1:08 ▶ Foundation 1:53 ▶ Foundation 3:05 ▶ BEST Strategy 0:56 ▶ Superpower 7:31 both

Every chart is one of four states

A chart can be an uptrend (HH/HL), a downtrend (LL/LH), a range (roughly equal highs and lows) or a consolidation (lower highs plus higher lows, which is a triangle). Both sideways states eventually resolve up or down. "Markets only either go up or go down."

▶ Foundation 3:27 ▶ Foundation 4:00 ▶ Unbiased 2:22 ▶ BEST Strategy 4:56 both

The 4-second rule

"Within the first four seconds of looking at a chart you need to be able to tell me what the chart is doing." No trend lines, MAs or indicators. A four-year-old ("little Timmy") could do it. If it takes you longer, "you're coping", so move on to the next asset.

flowchart LR
  A[Open chart] --> B{Named the state
in ≤4 s?}
  B -->|up| U[Worth attention]
  B -->|down / range / consol.| C[Note context, usually skip]
  B -->|no| S[Coping → next asset]
    

▶ Foundation 4:38 ▶ 4-Second Rule 1:13 ▶ 4-Second Rule 2:14 ▶ Unbiased 8:11 both

Timeframes nest

An LTF uptrend can sit inside an HTF downtrend, which can sit inside an even bigger downtrend. Say the state separately for each timeframe. You'll get a different answer on each, and that's normal.

▶ Foundation 5:03 ▶ Unbiased 1:28 both

No extra variables

He uses no RSI, open interest or funding ("I don't even use volume"). He doesn't need the "why" either (the yen, macro). He takes the market at face value. The tool you use to read the trend doesn't matter ("astrology, Gann, Ichimoku"), as long as it tells you which of the four states you're in. Even his MAs "never tell me something I do not already know".

flowchart LR
  T1[RSI] & T2[Ichimoku] & T3[Gann] & T4[200s + structure] --> Q{Which of the 4?}
  Q --> A[up] & B[down] & C[range] & D[consolidation]
    

▶ Foundation 5:46 ▶ Foundation 6:17 ▶ Unbiased 8:45 ▶ BEST Strategy 9:01 both

Market structure is the foundation, and it's interpretive

"If you don't understand market structure, you might as well throw everything out the window." An uptrend is HH/HL, and you anticipate it continuing until an HL breaks. A downtrend is confirmed by an LL and then an LH. Different people will pick different swings. His daily structure is simply where you can see a cohesive "wave" of candles and then a pullback.

▶ Stop Trading 0:16 ▶ Stop Trading 1:23 ▶ Stop Trading 1:45 ▶ Foundation 7:22 ▶ Foundation 8:22 both

Line-chart trick

If the structure is unclear, switch to a line chart and "you can see the wave". He calls it training wheels. Wicks drop out of the picture and only the swings of the closes are left.

▶ Foundation 9:33 ▶ Foundation 10:08 both

Strength attracts strength. Downtrenders get a 10-ft pole.

"Prioritize strong assets that are uptrending." "Strength is strength, and it attracts more strength." A downtrender only goes on the watch-for-reversal list, on a horizon of months rather than for a trigger this week. A multi-year range breaking down is the start of something bigger and bearish.

▶ Foundation 11:04 ▶ Foundation 18:58 ▶ Foundation 17:07 ▶ Foundation 17:30 both