steven-primoLA based, Steven Primo has been actively involved in trading the markets for over 38 years. His trading tenure began in 1977 at the Pacific Stock Exchange. Steven eventually left the Stock Exchange floor in 1994 to focus on managing money and to teach his own unique approach to trading the markets. Scores of students, from beginner to advanced levels, have gone on to become successful traders after being introduced to his proprietary methods of trading. These days Steven teaches his strategies through his website specialisttrading.com and also in conjunction with  protraderstrategies.com.

In the show Steven reveals:

  • The one indicator all your trades should follow
  • How to keep your trading as simple as possible
  • Specific Candlesticks to look out for
  • How he uses the “Confirmation method”
  • A simple way to de-risk your trades with “Range extensions”

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20: Steven Primo Shares His 3 Tips to Help Simplify your Trading
00:00:00 00:00:00

Recommended book

Street Smarts: High Probability Short-Term Trading Strategies by Linda Bradford Raschke

Platform & Broker

Tradestation for both.

Interview links

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Transcript notes

Cam Hawkins:

Steven, tell us a bit about yourself, personally, and what first attracted you to trading?

Steven Primo:

I started out not knowing anything about trading. I had just graduated college and was looking for a summer job and I happened to stumble across the Pacific Stock Exchange in downtown Los Angeles. The minute I saw it I fell in love with it. I had no idea what they were doing or what was going on but it just looked so exciting. I thought I could have a nice summer job there but it turned into a career.

I learned about trading and what the markets were by starting on the floor. I left the floor in the mid 90’s. That’s when I really starting to get into trading. I started to rely on everything I had been taught by my mentors.

Trading was a process that took many, many years to fully develop and it’s not something that ever ends but something you’re striving to keep in sync with.

I have a certain philosophy and certain way of doing things that I think is different from most traders and it lies in simplicity. It’s trying to keep things as simple as possible. Most of the methods I use, regardless of the market, are just based on a few simple rules.

Personally, right now, I live in Los Angeles and work out of my home office. I get up every morning at roughly 3:30am Pacific Time because I want to catch what the markets are doing. I give out a number of signals for our clients that trade the Forex currency pairs.

The type of trader I am, I’m really not concerned with news, in fact I haven’t looked at any news since I was trading on the floor.

Before I would say, 70-80% of my time was allocated to trading and now roughly about 10-20% of my time is allocated to trading and most of the time I’m conversing with my students, mentoring them and giving daily webinars. So I do that 5 days a week and on the weekends I don’t even think or consider anything about the market.

Cam Hawkins:

Can you give the listeners some insight into your trading? Your trading style, strategy, time frames, ave. trade duration, % winner’s, typical risk reward ratio… those sorts of things.

Steven Primo: 

During my time on the trading floor I became a specialist and was trading the way everybody else was and I was really struggling the first year or two when I had to make all my own decisions. I couldn’t understand it because I was reading all the same books everyone else did, I was following all the same fundamental news, looking at all the same indicators, same insight and nothing worked in terms of consistency.

I had a few mentors who were on the floor who could see how much I was struggling and they took me aside and they changed my way of trading around. Things like, whatever market you’re trading you should always try and be in sync with the market. A lot of traders, myself included, were always trying to pick tops and bottoms. I think the most valuable and simplest way to be in sync with the market is to plot a 50 period moving average on any chart and just ask yourself where price is in relation to that 50 period. If price is above that then the majority of price bars should be above the 50 period and that just means that your overall trend is up. If the majority of price is below that 50 period, then the overall trend is down. Right away you’ve eliminated half of your losing trades, because now you’re going to be in sync with the market.

Then the second thing I always look for regardless of market or timeframe is, I want to find a bar that closes in the top 25% of its range or bottom 25% of its range. If were above the 50 period moving average and close in the top 25% of the range there is a very high probability that we are going to continue in that direction for the next 3-5 bars. It doesn’t matter if it’s a 5 minute bar, a tick bar or monthly bar. And conversely if price if below the 50 period moving average and we close in the bottom 25% of our range there’s a very high percentage that we’ll continue in that direction for the next 3-5 bars.

This is what I basically look for if I’m looking at currency pairs, stocks or tick charts it the futures.

When I first started trading I was looking at a lot more daily bars and I was swing trading and I liked to hold position for anywhere between 2 and 5 days, maybe a couple of weeks. Now because I’m so busy teaching students my trading has been regulated down to intraday trading. So what I’ll look at are tick charts, anywhere from 1000-2500 tick charts on the Eminis Futures because I know if I’m teaching for the majority of the day it’ll give me a number of setups for maybe a couple of hours.

I always tell my students, “There is no, best, right or wrong timeframes”. I always tell my students that the best timeframe is the one that makes you feel most comfortable.

All of our standard strategies and methods have a 1:1 risk to reward ratio in its most basic format. But remember we’re not trading systems, we’re just giving you high probability areas in which to enter. How you choose to exit is up to you. We give you all the different ideas and variables in which to exit and we show you different ways in which to enter. These different variables can greatly increase your risk reward ratio to 4:1 and sometimes even 5:1, you’re making 5 times more than your risk is. But it all depends on what type of trader you are.

For me, personally, it’s usually anywhere between 1:1 and 2:1.

Cam Hawkins: 

What does your typical trading day look like?

Steven Primo:

I’m up at 3:30am my time, if I’m going to be busy all day I’ll start trading intraday markets and I’ll start trading on the overnight session which is roughly around 4am my time up until the opening of the day which is 6:30am. I will trade just of that hour and a half, two hours and for the rest of the day, mainly I’m mentoring and teaching.

If I have a more open schedule, I’ll be trading off the opening bell at 6:30.

Cam Hawkins:

In the beginning, what differentiated you from the average ‘Man on the street’ trader out there? What traits did you have, what actions did you take?

Steven Primo: 

When I started I was trading like 99.9% of the public. I was trying to pick tops and bottoms. I really didn’t have any success until my mentors taught me a few simple rules which were to never try and pick tops and bottoms, and to not go for home runs but to go for consistency.  What finally got me to have consistency was being in sync with the market and not trying to sell tops or buy bottoms; not listening to the news as it’s very subjective and simplifying my trading and not over complicating it. It really takes discipline and character to simplify your trading; by letting go of all of the conventional wisdom and holding onto 3-4 basic rules that will help you become consistent. Once I did this, that’s what got me on the road.

Cam Hawkins: 

If you were a retail trader working a day job, what 3 steps would you take to start earning an income as a trader?

Steven Primo:

The first thing would be to not quit my job. So many traders do that and I get emails all the time saying “How long will I need to trade before I can be self-sufficient?” I always tell people to save up enough money to have a nice nest egg so that if you didn’t have a job you could survive for a good 2-3 years. Then I would say, attend every webinar, read every book, read every magazine or listen to podcasts such as your own Cam, to get as much information as you can while spending the least amount of money as possible. Because people often think, if something costs a lot, if I’m going to spend $10,000 on this system I’m going to be profitable. And it’s not true.

Then once you’ve studied enough to get some type of plan together, do not trade, but paper trade first. You must see how this process unfolds in real time because anything looks great in a book or a static chart but the minute you start seeing it unfold in real time it’s a little bit more difficult. Paper trading can be for 3 days or 3 months. I still paper trade, when I get an idea for a strategy I paper trade things for a couple of months and it really helps me because if I started trading them, most likely I would have lost money because some of them were faulty strategies. So paper trading really helps in the process of real time.

Then once you feel really confident, then I would say start trading with real capital but very small amount. And once you start getting on that consistency where you’re able to consistently make money, even if it’s only a few dollars a week. Then I’d start thinking about, maybe you’re ready to quit the job and you can start using larger sizes in your account.

Cam Hawkins:

How long do you think you should spend educating yourself before you start paper trading?

Steven Primo:

Once again, this is a subjective answer because everyone’s different. There was a student of mine in India and in a month he was successfully trading one of my strategies consistently and doing extremely well. We have other students who take upwards of a year. I would say, at least give yourself a good year. It took me at least 2 years even with all the information I had access to.

Cam Hawkins: 

Can you explain to the listeners your preferred trading strategy, the ins and outs of how it works and why you choose this type of strategy over others?

Steven Primo:

This goes back to what I stated earlier. Where is price in relation to the 50 period? This morning price was automatically above in the S&P index because the market had a rally most of the day. If we look at a chart of that, today being Monday the 10th August you’ll see that we were above the 50 period moving average most of the day on an intraday chart. So, I was mostly looking for long positions today. Earlier in the morning many bars closed at the very high of their range so that was my setup, and so I basically picked the last lowest low for my stop placement. Then I took a 1:1 risk reward ratio exit. So when I entered I simply placed my exit order and placed my stop order. Once we got half way to my designated area for exiting I moved my stop to unchanged because I wanted to protect myself. Once again this is a suggestion; this isn’t a rule that everyone has to do. If you see that price has traveled a good distance to your exit point it’s good, especially for beginners to move your stop to unchanged. The only trouble with this is that many times you’ll get stopped out at break even and then the trade will go in your right direction. So, this is where that insight comes from paper trading. You can tell, such as today which was a strong market, it’s okay to move my stop to unchanged. But if it’s a weak market and there’s a lot of back and forth filling I may not want to move my stop to unchanged because I may get stopped out and see prices go right back up. So this is the insight that we talk about that comes with paper trading.

Cam Hawkins:

Why did you choose this strategy over others?

Steven Primo:

One thing that my mentors taught me and has stuck with me over the years was that everything you need to know comes from the market, it’s right there in front of you. There’s no outside source that will give you the edge and consistency that the chart will.

Cam Hawkins: 

If you split your trading up into technical vs fundamental, what would that split look like?

Steven Primo:

200% fundamental [Laughs], I’m sure you can tell, I’d be 100% technical.

Cam Hawkins: 

Diving a little deeper, thinking about any price chart, what 3 things would you recommend a novice trader educate themselves on when reading a chart?

Steven Primo:

Whenever you enter, don’t simply enter at the market or with a limit order, maybe below to get a low price. I would use the confirmation method. So whatever strategy you decide to use, based off technical, fundamentals or even based off the full moon. It doesn’t matter. Whatever the bar is that tells you buy, don’t simply buy at the market, wait for that bar to close (that’ll be your setup bar) and then you must confirm that on the very next bar it goes above it, and that’s your entry. You won’t get the best price. You know, buying at the low. But remember we’re not looking for that. We’re looking for consistency in the market and this will really keep you out of a lot of bad setups.

The same goes if you’re going short. Rather than just selling at the market wait for price to trade 1-3 ticks below the bar that initiated the sell signal.

Cam Hawkins: 

How long did it take you to go from trading newbie to consistently profitable trader?

Steven Primo:

Roughly about 5 years.

Cam Hawkins: 

What’s your mental approach to trading and what special techniques do you use to keep your emotions in check?

Steven Primo:

I’m very different from most traders. I’ve never really had any type of problem with emotions. The main thing for me is just complacency because sometimes there’s nothing happening and I’ll want to trade just to trade and you’ve always got to stay out of the markets when that happens because most of the time you’re going to have a losing trade. I just have to always be on guard that sometimes it’s going to be boring and you’re going to want to create a trade out of nothing.

Cam Hawkins: 

What’s your favorite entry setup?

Steven Primo:

Once again, I think I’ve gone over it enough. Look for a bar that closes in its top 25% of its range and above the 50 period moving average.

Cam Hawkins:

What strategies do you use to exit and manage active trades?

Steven Primo:

Once again, I’ll usually use a 1:1 risk to reward ratio because I need to get in and out quickly because of my time schedule. But often times we have proprietary tools that will leave you staying in the trade a lot longer and they are basically trend tracking tools that let the market take me out as opposed to having a target.

Cam Hawkins: 

What’s your recommended “must read” trading book?

Steven Primo:

This is an easy one. I use to work with him, he’s also one of my mentors, Larry Connors. A great trader and a great researcher. He wrote, in the 90’s along with Linda Raschke, it’s called “Street Smarts”. It’s a great book for anyone trading from beginners to advanced, it doesn’t matter. It really uses the simple process for simplifying things and really has some great ideas for trading.

Cam Hawkins:

Do you automate parts of your trading? If so, what have you automated, why and how does it help you?

Steven Primo:

No, I personally don’t believe in automated trading because it takes the trader out of the process.

Cam Hawkins: 

If there was one thing you would recommend any retail trader spend the next month mastering, what would it be, why and how could they go about mastering it?

Steven Primo:

The main thing is to simplify your trading. Simplify. I know it’s difficult and I know traders want to believe in this notion where the more complicated it is the better. But if you clear your screen of all the indicators you have. I mostly only look at one indicator at a time and that’s the 50 period moving average. If you could clear your screen, let go of news, chat rooms and trading rooms. I really thing you’ll get onto that road of consistency much quicker.

Cam Hawkins:

What trading related internet resource, like bloomberg.com, do you always use?

Steven Primo:

I just use my own information that I’ve accumulated over 38 years. I’m pretty self-sufficient.

Cam Hawkins: 

What’s the biggest mistake most retail traders make?

Steven Primo:

Trying to pick tops and bottoms.

Cam Hawkins: 

What’s your preferred broker and trading platform?

Steven Primo:

I’d have to say Tradestation.

Cam Hawkins: 

If there was one mantra or saying our listeners should reminded themselves of each day, to help improve their trading, what would it be?

Steven Primo:

Don’t have an opinion, you’ll be wrong.

Cam Hawkins: 

If you could leave our listeners with one piece of advice what would it be?

Steven Primo:

Overthinking is what kills your trading. Keep it simple.

Cam Hawkins: 

Perfect! For those not in the know, my mastermind community are working towards creating a profitable trading system. If you’re not in the mastermind yet, just jump on 52traders.com and join today while it’s free.

So, Steven, today your task is this:

We’d like you to help us find a high probability exit point for our trading system. We already have a market to focus on (namely the S&P500), and we’re looking for specific standard indicators, candlestick formations, market events, those sorts of things…

So Steven, to help us pinpoint high probability exit points for our trading system what “3 golden nuggets” can you share with us today?

Steven Primo:

Today the S&P index closed in its top 10% and above the 50 period moving average. Anyone who’s been listening to me knows that that means something. So, what I would do is measure today’s range. The range of the bar that generated your buy signal and then simply double that. This is called a 200% range extension. So if the range is 20 points you simply add that to the top of that bar and that’s where your first exit is going to be. That’ll be your 1:1 risk reward ratio.

Now, if you want 2:1, now you add that again and this will give you exit level number 2. This is your 300% range extension. And the last one obviously would be your 400% range extension. This is what increases your risk reward ratio and this is what will keep you in the trade a lot longer.

So what we do is, every time you get to one of these levels you move your stop to the previous range extension. So if we get to the 300 level you move your stop up to the 200. That way you’re always protecting yourselves. This is very basic but a nice way to stay in the trade and you can use it with any strategy and any timeframe.

Cam Hawkins: 

Before we wrap up what’s the best way for traders to get hold of you?

Steven Primo:

You can contact and follow me on twitter. My handle is @spclsttradg. My website is specialisttrading.com and I teamed up years ago with protraderstrategies.com (they’re our sister site). They market and promote all of my courses, all of my teaching strategies. So, there’s a good way to get more information there as well.

Tell me what you thought!

Please feel free to leave a comment or question about the show in the comments section below.


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