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This episode features Peter Brandt—50-year market veteran, Market Wizards legend, and verified eight-figure trader—sitting down on the Words of Wisdom podcast to talk shop. Brandt’s been through everything from 1970s grains to a 600% year in 1987, and he doesn’t mince words on prop “evaluation” firms, day trading traps, and what it really takes to last. If you’re a newer trader wondering whose playbook to study, this is the guy.
In this post, you’ll learn Brandt’s core strategy principles: why cutting losses fast and letting winners actually run beats “signal hunting,” how to choose swing/position trading over noisy intraday churn, and why meticulous journaling and stats (think profit factor, gain-to-pain, Pareto outcomes) separate careers from lucky streaks. We’ll break down his process into beginner-friendly, step-by-step takeaways you can start applying today—so you stop obsessing over entries and start managing risk, size, and your head like a pro.
Peter Brandt Playbook & Strategy: How He Actually Trades
Core Philosophy: Trade What You See, Not What You Think
Brandt keeps it simple: classical chart patterns, strict risk, and a small set of repeatable behaviors. The edge isn’t prediction—it’s execution. Here’s how that looks in rules you can actually follow today.
- Define your method in one sentence: “I trade classical breakouts and failed moves on daily/weekly charts.”
- Only take trades that cleanly fit your one sentence; pass on everything else.
- Expect long flat periods; avoid the need to “be active.” No setup = no trade.
- Measure results by risk-adjusted metrics (profit factor, gain-to-pain) rather than win rate.
- Assume any single trade can fail; your job is to survive to the next valid setup.
Market Selection & Timeframes
He focuses on liquid futures/FX/majors and leading equities when patterns are clean, working mostly from daily/weekly charts. The higher timeframe filters out noise and lets trends express themselves.
- Build a watchlist of 50–150 liquid tickers (index futures, FX majors, top sector leaders).
- Scan weekly first, then daily; only drop to 4H/1H to fine-tune risk, never to justify a bad daily setup.
- Trade strongest trends only: 20-DMA > 50-DMA > 200-DMA for longs (reverse for shorts).
- If a chart is “messy” (overlapping bars, whipsaws around VWAP/MA), exclude it—clarity is part of the edge.
- Limit simultaneous positions in highly correlated names to avoid hidden portfolio-level risk.
Setup: Classical Patterns That Compound Edge
Brandt leans on patterns with decades of statistical and experiential backing—breakouts from ranges, flags, triangles, failed breakouts, and big rounded bases/tops. The power is in consistency and clean structure.
- Only trade if you can label the pattern in plain English (e.g., “weekly ascending triangle”).
- Breakout rule: wait for a close outside the structure; no anticipatory entries.
- Failed-break rule: if price re-enters the pattern after a breakout and closes back inside, flip bias or exit.
- Require contraction before expansion: 20-day ATR below its 6-month median improves quality.
- Avoid “diagonal hope lines”: trendlines that require art to draw are a pass.
Entry Triggers: Price Confirmation Over Prediction
Entries confirm that the market—not the trader—has decided. That means breakouts on closes, retests that hold, or failed-break reversals, all sized from objective levels.
- Breakout entry: buy/sell the close through the level; add on the first clean retest that holds.
- Retest criteria: intraday probe is okay; the close must hold beyond the level.
- Failed-break reversal: enter in the opposite direction only after a full bar closes back inside the range.
- Don’t chase: if slippage makes the initial risk > 1R plan, skip the trade.
- If news creates the breakout, anchor your risk to the pattern level, not the headline.
Risk & Position Sizing: First, Don’t Blow Up
Survivability funds compounding. Sizing is derived from structure (pattern invalidation), not feelings. The stop is where the pattern is wrong—period.
- Risk per trade: 0.25%–0.75% of equity for diversified portfolios; cap portfolio daily loss at 1%–1.5%.
- Stop placement: just beyond the opposite side of the pattern (below base/above top) with a small buffer (e.g., 0.5–1.0 x 20-day ATR).
- Position size = (account risk per trade) ÷ (entry – invalidation).
- Hard rule: never widen a stop after entry; only tighten.
- If correlation spikes (e.g., risk-on melt-up/melt-down), cut total exposure by 30%–50%.
Trade Management: Let Winners Breathe, Cut Losers Fast
Most P&L comes from a minority of outsized trends. You must give them room while suffocating losers quickly.
- Initial target concept: none. Use trailing logic to harvest trends rather than fixed targets.
- Trail with structure: ratchet stop under/over higher lows/lower highs on the daily; move only after bars close.
- Add-on only if risk doesn’t expand: new unit must bring blended stop to breakeven-or-better.
- If the price closes back inside the broken level for two consecutive sessions, reduce by 50% or exit.
- Weekly bar reversal against your position after an extended run = take at least one-third off.
Exits: Rules for Both Good and Bad Outcomes
Exits are where discipline pays. Create automatic responses to common price behaviors so you don’t improvise under stress.
- Loser exit: hit the stop without debate; immediately log the reason.
- “Stall” exit: three consecutive closes with smaller ranges and declining volume near highs/lows—tighten stop to the last swing.
- Climax exit: >2 x 20-day ATR move in 3–5 sessions—scale 25%–50% and trail the rest aggressively.
- Time stop: if a breakout doesn’t move >0.5 x ATR(20) in your favor within 10 trading days, close half.
- Rule of three: if you get stopped out three times in the same instrument/pattern, stop trading it for one month.
Journaling & Stats: Turn Trades into Data
The edge compounds when you measure what actually works. Keep stats on patterns, markets, and conditions—then drop what underperforms.
- Log every trade with: pattern type, timeframe, R multiple, ATR on entry, trend state, and notes on execution.
- Review monthly: kill bottom-quartile patterns by R-multiple; double down on top-quartile.
- Track “giveback”: average % of open profit lost before exit—optimize your trailing logic to reduce it.
- Maintain a “no-trade library” of near-misses to refine your filter.
- Pre-market checklist: trend state, volatility regime, correlation, event risk, A-setups only.
Psychology & Process: Boredom Is a Superpower
Brandt’s process is boring on purpose. Long stretches of waiting and small losses are the price of capturing big swings—and the only way to avoid death by a thousand cuts.
- Weekly ritual: refresh watchlist, mark A-setups, set alerts; no doom-scrolling charts.
- Two-strikes rule: after two execution errors in a day, stop trading and journal.
- Separate equity curve from identity: your worth ≠ your P&L.
- Use if-then plans: “If retest holds and closes above X, then enter; else pass.”
- Protect energy: fixed start/stop times, no revenge trading after a loss.
Risk Events & Correlations: Respect the Calendar
Trends can gap through levels around major events. Treat economic releases and earnings as structural, not just “news.”
- Avoid new positions within 24 hours of Tier-1 events (rate decisions, CPI/NFP) unless the setup is A+.
- For existing positions, cut size by 30%–50% or widen stop pre-event only if your size is reduced to keep risk constant.
- Earnings rule (equities): hold only if your stop is outside a 3-year average earnings gap range.
- Correlation guardrail: if your top positions are >0.75 correlated over the last 20 days, cap combined risk to 1R total.
- If a catalyst changes the regime (volatility spike, trend flip), purge marginal trades and rebuild from the weekly.
Continuous Improvement: Keep What Pays, Bin What Doesn’t
The playbook evolves by pruning. Review often, keep the simple rules that print R, and cut the clever ones that don’t.
- Quarterly cull: remove the lowest-Sharpe symbols and patterns from your universe.
- Add only one new pattern per quarter and size it at half risk until it proves itself over 30 trades.
- Run a “dumb baseline”: buy 52-week highs with the same risk rules—beat it or change your edge.
- Archive charts of your top 20 winners and top 20 losers each year; re-read before every week’s scan.
- Make breaking a rule expensive: dock future size by 25% for 10 trades after any process violation.
Size Risk First: Position by ATR, Not by Conviction
Peter Brandt hammers home that conviction doesn’t pay margin calls—position sizing does. He sizes trades off volatility so a choppy name doesn’t sink the ship, while a smooth trend can carry weight. Think in R, not dollars: define the stop where the pattern is invalid and let ATR translate that distance into units. When the ATR widens, position size shrinks; when volatility compresses, size can increase—rules, not vibes.
In practice, Brandt keeps risk per idea small and consistent so a string of normal losses can’t derail the campaign. Start by choosing a fixed risk (e.g., 0.5% of equity), measure entry-to-stop in price terms, then compute shares/contracts so loss at the stop equals that 0.5%. If slippage or spread pushes risk beyond your cap, you don’t “want it more”—you pass. Do this every trade and you’ll trade longer, think clearer, and let the few big trends do the heavy lifting.
Trade the Setup, Not the Story: Mechanics Beat Predictions
Peter Brandt is blunt: narratives are entertainment; setups are money. He waits for price to confirm—clean breakouts, valid retests, or failed breaks that close back inside a range—then acts. The story about why it’s moving doesn’t matter if the level isn’t taken and held. His checklist lives in the chart: structure, trend alignment, volatility filter, and risk location.
Brandt’s discipline shows up after entry, too. He manages by rules—trail stops under structure, add only if blended risk improves, and exit if the setup invalidates—rather than by hope. If a breakout gives back and closes inside the pattern, he reduces or flips without debate. By keeping decisions mechanical, Peter Brandt avoids the endless second-guessing that wrecks consistency and lets the winners prove themselves over time.
Diversify Smart: Underlying, Strategy, and Duration — Not Just Names
Peter Brandt doesn’t confuse a list of tickers with true diversification. He spreads risk across different underlyings (commodities, FX, indices, select equities), different strategy types (breakouts, failed-break reversals), and different holding durations (swing vs. position). That mix keeps any single regime—low vol chop, risk-on melt-up, commodity shock—from dominating the P&L. If correlation rises across your book, Brandt trims exposure even when the charts look tempting.
He also staggers entries so campaigns don’t start on the same day and end the same way. When two trades share a catalyst or a highly correlated driver, he treats them as one position for risk limits. Brandt caps total portfolio heat, then allocates more risk to the cleaner setup and less to the noisy cousin. The result is smoother equity, fewer cluster losses, and the headspace to let winning trends actually work.
Define Your Risk: Cut Losers Fast, Let Trends Breathe
Peter Brandt treats every trade like a hypothesis with a predefined point of failure. The stop goes where the pattern is objectively wrong, not where it “feels” safe. Once placed, it never widens—if price tags it, the trade is over and the capital is free for the next clean setup.
On winners, Peter Brandt does the opposite of most traders: he gives them oxygen. He trails behind structure or swing points so trends can extend, accepting normal pullbacks as the cost of catching the big move. Partial profits are taken into obvious climaxes, but the core rides until the market proves the trend has ended. This asymmetry—small, certain losses and open-ended gains—is the engine that powers his long-term returns.
Rules Over Feelings: A Boring Process That Compounds Big
Peter Brandt builds his edge on routine, not adrenaline. He scans weekly first, marks A-setups, sets alerts, and spends most days doing nothing—because doing nothing is a position. Checklists replace gut feel: pattern identified, volatility acceptable, stop defined, size calculated, event risk considered. If one box fails, he passes without debate. That calm, repeatable rhythm is how he avoids the costly “I just had to trade” impulse.
After entry, Peter Brandt sticks to the script. He journals every decision, tracks R-multiples, and reviews stats to kill low-quality patterns—even if they feel good. Two execution errors in a session end the day; revenge trading is off-limits. When correlations spike or the tape turns messy, he proactively cuts portfolio heat and waits for clarity. Over time, this “boring” process compounds returns while most traders burn capital chasing excitement.
In the end, Peter Brandt’s message is disarmingly simple: trade a narrow playbook with ruthless risk control and let math—not moods—run the show. Size positions by volatility so a single idea can’t torpedo the account. Define risk where the pattern is objectively wrong and never widen the stop. Enter on confirmation, manage by structure, and accept that most trades are small scratches that buy you a ticket to the few that matter.
He also shows that durability beats brilliance. Diversify by underlying, strategy, and holding period to dull correlation spikes. Keep a boring routine—weekly-to-daily scans, A-setup checklists, if-then plans—and journal the results so the numbers can prune weak edges and amplify strong ones. Do this long enough, and the equity curve starts compounding not because you guessed right, but because you executed right. That’s the real edge Peter Brandt hands you: a process sturdy enough to survive the next regime and the one after that.
