Table of Contents
In this Words of Rizdom studio sit-down from New York, the guest is Carmine from Investor Traits—a short-term day trader who cut his teeth after 2016 and now teaches a pragmatic, no-fluff approach to markets. He talks candidly about blowing up small accounts, ditching the get-rich-quick mindset, and why he views the market as an auction where order flow—not patterns—tells the real story. You’ll hear why his “defense first” philosophy matters, how screen time builds feel, and why uniqueness beats herd behavior every time.
Read on to learn the core of Carmine’s trader strategy: precise risk management (protect the account like a “baby”), using order flow to confirm levels, and adapting entries, stops, and sizing to changing volatility. We’ll unpack how to handle drawdowns without quitting, build a repeatable process with if-then playbooks, and develop your own edge instead of copying signals—so you can think for yourself, survive losing streaks, and scale up intelligently.
Carmine Playbook & Strategy: How He Actually Trades
Risk-First Framework (Protect the Account)
Before anything else, the priority is staying in the game. This section explains how to cap downside so you can let your winners work without fear of ruin. If you get the risk piece right, everything else compounds faster and cleaner.
- Risk a fixed 0.25%–0.75% of equity per trade; never exceed 1%.
- Pre-define max daily loss = 2R and max weekly loss = 6R; hit it → stop trading.
- Hard stop goes where your idea is invalidated, not where it “feels safe.”
- Use a volatility-adjusted stop: ATR(14) × 0.75 for day trades; position size = (risk $) / (stop distance).
- If slippage pushes realized risk > 1.2R on entry, cut and re-enter cleanly rather than “hoping.”
Market Structure & Order Flow Read
You’re trading an auction, not a crystal ball. This section covers how to frame a trend, balance vs. imbalance, and use order flow to confirm you’re on the right side of pressure.
- Start with HTF → LTF scan: Daily → 60m → 15m → 5m.
- Mark the prior day’s high/low, overnight high/low, and session VWAP as decision levels.
- Classify the open: Open Drive / Open Test Drive / Open Rejection / Open Auction; only take setups aligned with the open type.
- Confirm direction with cumulative delta, making HH/HL (or LL/LH) in the direction of price.
- Avoid longs if the price is below VWAP and rejected twice; avoid shorts if above VWAP and holding.
A-Setups Only (When to Trade)
Most losses come from forcing B and C setups. This section tells you what “go” conditions look like so you can wait, strike, and scale with confidence.
- Trade only when 3 of 4 align: HTF bias, location (key level), order-flow confirmation, and volatility (ATR above median).
- Location rules: reclaims of PDH/PDL, first pullback to VWAP after trend start, liquidity sweeps at session extremes.
- Skip the first 5–10 minutes after the open unless an Open Drive is confirmed by delta + volume.
- If expected range < 0.7× 20-day median, reduce size by half or sit out.
Entry Triggers (Precision Over Prediction)
Entries are about timing the imbalance, not guessing tops/bottoms. Here’s how to pull the trigger with minimal heat.
- Use limit entry at the retest of the broken level; if it misses, one chase attempt only within 0.25R.
- Candlestick micro-confirmation: an impulsive candle that closes above/below the level + next candle holds 50% of the impulse.
- Time filter: prefer entries:00 /:15 /:30 /:45 when liquidity rotates; avoid low-liquidity minutes unless trend is driving.
- If bid/ask imbalance ≥ 60/40 at level and delta flips, execute immediately with pre-set stop.
Position Sizing & Scaling
Your edge expands with sizing discipline. This section shows how to size up without blowing up.
- Base size from risk model; no martingale; add only when risk per idea stays constant.
- Two-part entry: 60% size on trigger, 40% on first pullback that holds; same stop for both.
- Scale-in cap: maximum of 2 adds; each add must reduce average risk per share.
- Size multiplier: A-setups 1.0×, B-setups 0.5×, news/unclear tape 0×.
Managing the Trade (While You’re In It)
This is where P&L is made or lost. The goal is to let good trades pay while cutting dull or wrong ones fast.
- Move stop to breakeven at +1R only if structure confirms (higher low for longs / lower high for shorts).
- If price stalls for 3 consecutive rotations around VWAP with flat delta, halve the position.
- On strong trend days (range expansion, rising volume), trail behind the 8/20 EMA band on the execution timeframe.
- If an opposite delta divergence persists for two rotations at your target, exit the remainder.
Exits & Targets
Exits should be rules-driven, not vibes. This section gives you the exact ways to lock in gains without choking the winner.
- Default target ladder: +1R, +2R, +3R; take 30% / 30% / 40%.
- At +2R, trail stop to prior swing or VWAP ± one tick, whichever is tighter.
- If the session range already > 1.25× 20-day median by mid-day, favor one-and-done targets (front-load exits).
- Into key HTF levels (PDH/PDL, weekly open), scale out early; expect first touch reaction.
Playbook Setups (Repeatable Patterns)
Here are the bread-and-butter plays. This section gives you the core checklists to recognize and execute high-probability sequences.
- VWAP Reclaim Trend Start (Long):
- HTF bull bias; sell program exhausts below VWAP → reclaim & hold 2 bars
- Delta flips positive; first pullback holds VWAP ± 0.1%
- Stop: VWAP – 0.25× ATR(14); Targets: HOD sweep / +2R / trail
- Failed Break → Reversal (Short):
- Run above PDH; immediate absorption (delta up, price flat)
- Break back below PDH; retest fails with lower high
- Stop: above wick high; Targets: VWAP / POC / +3R
- Open Drive Continuation:
- Opening 5-minute range breaks with volume > 150% of 20-day average
- No meaningful pullback to OR; buy first OR retest with delta confirmation
- Stop: below OR low; Trail: 8/20 EMA band
News & Volatility Adjustments
Volatility regimes change your rules. This section shows how to adapt risk and timing around catalysts.
- Pre-planned calendar: reduce base risk by 50% during major data releases; no new trades 2 min before/after.
- For elevated VIX or ticker-specific news, double stop distance, halve size, keep R constant.
- On sub-vol days (ATR contraction), switch to mean-reversion only around VWAP bands; take profits faster (+1R cap).
Daily Routine & Prep
Consistency beats intensity. This section outlines the workflow that keeps the edge sharp and your mind clear.
- Pre-market (30–45 min): mark HTF levels, yesterday’s POC/VWAP/High/Low, list 3 tickers max with catalysts.
- Define If-Then for each ticker: “If VWAP reclaims after liquidity sweep → take pullback with 0.5% risk.”
- Write a one-sentence bias for each: “Long unless VWAP lost and delta stays negative for 2 rotations.”
Journaling & Metrics
You can’t fix what you don’t measure. This section details exactly what to track so your A-setups stand out—and scale.
- Log setup type, R multiple, heat (max adverse excursion), hold time, delta context, and VWAP relation.
- Tag every trade A / B / C; only scale size after 20 A-setups with win rate ≥ 55% and avg R ≥ +1.2.
- Weekly review: cut the bottom 20% of patterns by expectancy; double down on the top two.
Psychology & Behavior
Mindset is a risk tool. This section gives practical rules that keep execution clean when emotions spike.
- Two-loss lockout: after two consecutive full-R losses, take a 30-minute break; no exceptions.
- Use a decision checklist (bias, level, trigger, stop, size, news); if any item = “no,” skip.
- End of day: zero screens for 60 minutes; write a three-line debrief (what worked, what didn’t, one tweak).
Size Risk First: Fixed R, volatility-adjusted stops, survive to compound.
Carmine hammers one point from the jump: protect the account like it’s oxygen. He sizes every trade off a fixed R number so losses are pre-defined and boring, not catastrophic. Volatility sets the distance; size does the rest—so a wider stop on a wild day doesn’t mean more risk, just fewer shares. This is how Carmine keeps emotions out of it and lets math do the heavy lifting.
He also treats daily and weekly loss limits as hard circuit breakers, not suggestions. If the tape slips and the first entry isn’t clean, Carmine cuts quickly and resets rather than “averaging and praying.” That discipline builds a smoother equity curve because singles and doubles add up when big drawdowns are rare. In short, Carmine’s edge starts with sizing—so the strategy can live long enough to compound.
Trade the Auction: Mechanics, order flow, not crystal-ball predictions.
Carmine treats the market like an auction where price discovers value, not a fortune-telling machine. He starts with a higher-timeframe context, then watches how bids and offers behave at key levels to decide if buyers or sellers actually care. When cumulative delta and volume confirm the move, he acts; when they don’t, he waits. No predictions—just reading who’s in control and whether that control is strengthening or fading.
At the open, Carmine classifies the day’s character—drive, test, or chop—and lets that dictate aggression and targets. He respects VWAP and prior session levels as decision zones, but the trigger is always tape behavior, not a pretty line. If price reclaims a level and order flow agrees, he presses; if absorption shows up, he flips bias or stands down. By prioritizing mechanics over opinions, Carmine avoids the hero trade and stays aligned with the auction’s real-time story.
Diversify by Underlying, Strategy, and Duration to Smooth Equity
Carmine doesn’t let one ticker or one playbook own his P&L. He spreads risk across a small basket of liquid names, mixing mean-reversion and trend-continuation so they don’t peak and trough together. Time matters too—he staggers intraday scalps with same-day holds and occasional swing attempts when the higher timeframe lines up. That blend keeps his curve steadier when any single idea goes cold.
He also diversifies the way profits are taken: some trades ladder out quickly, others trail behind structure to capture range expansion. If volatility compresses, Carmine dials up VWAP fades; when it expands, he shifts toward momentum and range breaks. The rule is simple—rotate what’s working, de-emphasize what’s not, and cap exposure so no single bet can wreck the week. Diversification, for Carmine, isn’t theory; it’s a daily throttle that smooths returns and extends his edge.
Only A-Setups: Clear rules, location, confirmation, and volatility alignment
Carmine filters hard for A-setups, so he isn’t bleeding on B and C ideas. He wants a clean location first—prior day high/low, VWAP, or a well-defined supply/demand shelf—then confirmation from order flow or a reclaim/reject that proves the level matters. If volatility is below his threshold or the open is indecisive, he simply waits; no signal, no trade. The goal is fewer decisions, higher quality, and more consistent R-multiples.
When an A-setup appears, Carmine commits with pre-written rules: entry at retest, stop at invalidation, and size from fixed risk. He demands alignment across timeframes (HTF bias + LTF trigger) and won’t chase beyond a small tolerance. If any element slips—location messy, delta disagrees, ATR contracted—he downgrades the idea or passes entirely. By guarding his attention and capital this way, Carmine keeps his edge concentrated where it actually pays.
Exit Like a Pro: Ladder targets, trail smart, kill laggards fast.
Carmine treats exits like a playbook, not a feeling. He scales out in stages—first piece off at around +1R to pay for risk, another at +2R if momentum persists—so winners bank cash without needing a perfect top. When trend strength shows up, he trails behind structure (prior swing or VWAP band) to let the market do the lifting while his stop tightens. If delta flips against the move or the tape starts stalling at a key level, he stops negotiating and takes the rest.
He’s just as decisive with losers: if a trade lingers with no progress, Carmine cuts partials quickly and frees up mental capital. Time is a position too—he gives ideas a fair window, then kills laggards before they drain focus and edge. Into higher-timeframe levels or extended session ranges, he front-loads profits and avoids overstaying a move that’s already paid. The net effect is simple: exits become systematic cash flow, not coin flips.
Carmine’s core lesson is that survival powers performance. He treats risk like oxygen—fixed R sizing, volatility-aware stops, and hard daily/weekly loss limits that shut the terminal before tilt shows up. He reads markets as auctions, not puzzles to solve, using structure (PDH/PDL, VWAP) and order flow to confirm who’s actually in control. That focus on mechanics over prediction—plus a bias-to-action only when A-setups align—keeps him from bleeding on noise and frees him to press when the tape is clean.
From there, discipline becomes a system, not a mood. Carmine diversifies by ticker, tactic, and time horizon so no single theme can hijack the curve, and he manages trades with preplanned exits: early paydown at +1R, scaling through strength, and trailing behind structure. If momentum fades or delta flips, he’s out; if the idea is slow, he kills it and moves on. Prep, journaling, and tight feedback loops round it out—codifying what works, cutting what doesn’t, and sizing up only after the data says the edge is real. The takeaway: protect first, read the auction, trade only your best criteria, and let systematic exits turn good decisions into repeatable cash flow.
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