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This interview features trader Dan Shy on the Desire To Trade podcast with host Etienne Crête. Dan’s a professional money manager at Sharp Trade LLC with roughly two decades in the markets, known for keeping charts clean and decisions focused. He’s traded through booms, busts, and the inevitable humbling “never again” moments—perfect context for anyone who wants practical strategy from someone who actually trades for a living.
You’ll learn Dan Shy’s core rule—“it’s not about the one trade; it’s about the many trades”—and how he backs it up with risk management, tracking accuracy, and strict risk-reward. He breaks down his swing-trading workflow (think 4-hour and 90-minute charts, a simple EMA setup, and the Aroon indicator), why traders shouldn’t pay bills from their trading account, and how to cut losers quickly without ego. Expect clear guidance on position sizing, keeping records, avoiding “Christmas tree” charts, and staying sane by unplugging between decisions.
Dan Shy Playbook & Strategy: How He Actually Trades
Core Philosophy: Many Trades, One Process
Dan Shy treats trading like running a factory—repeatable, simple, and consistent. He doesn’t hunt for “the one” setup; he stacks small statistical edges across many trades and lets math do the heavy lifting.
- Aim for dozens of qualified trades over a month, not a handful of moonshots.
- Keep every rule written and repeatable; avoid one-off exceptions.
- Judge the process by a large sample size (100+ trades), not last week’s P&L.
- Avoid “genius” narratives; focus on checklists and execution speed.
Risk First: Position Sizing & R-Multiples
Before entries, Dan sizes risk so any single loss is a non-event. He standardizes risk per trade and thinks in R-multiples to keep evaluation consistent across markets and timeframes.
- Risk is a fixed 0.5%–1% of account equity per trade.
- Define R = initial stop distance; size position so max loss = 1R.
- Require a minimum 1:2 reward-to-risk at entry (target ≥2R).
- Never widen stops after entry; if structure changes, exit and re-enter cleanly.
Timeframes & Chart Layout (Keep It Clean)
He uses a higher-timeframe structure to find the path of least resistance, then a lower timeframe to fine-tune entries. Charts are deliberately minimal to reduce hesitation and emotional noise.
- Higher timeframe: 4-Hour for trend bias and key levels.
- Execution timeframe: 90 minutes for entries and stop placement.
- Use a simple EMA layout (e.g., 20 & 50 EMA) to define momentum and pullbacks.
- Keep indicators sparse—no “Christmas tree” overlays that slow decisions.
Trend Filter With Aroon (Momentum Confirmation)
Momentum matters. Dan adds a straightforward trend-confirmation step so he’s aligning with flows rather than guessing reversals.
- Apply Aroon(14) on the 4-Hour chart as a trend filter.
- Only take longs when Aroon Up > 70 and Aroon Down < 50; shorts invert that.
- Stand aside when both lines chop around mid-range (trend uncertainty).
- Re-check Aroon after each candle close; ignore intrabar noise.
Entry Triggers That Don’t Overthink
Entries are mechanical: trend + pullback + confirmation. If the recipe isn’t there, no trade—no “but it looks good” exceptions.
- Longs: Price above 20 & 50 EMA on 4-Hour; 90-Minute pullback to the 20 EMA that holds; bullish rejection candle or higher-high break to trigger.
- Shorts: Mirror the rules below the EMAs with a bearish rejection or lower-low break.
- Place a stop just beyond the last swing structure (wick/level) on the 90-minute.
- If the entry candle closes back through both EMAs, skip the setup—trend may be weakening.
Exits, Scaling, and Trade Management
Exits are preplanned. Dan protects downside first, then lets the market decide if the trade deserves more breathing room.
- First scale: Take ½ off at +1R; move the stop to breakeven.
- Final target: +2R to +3R, or trail behind the 20 EMA on the 90-minute chart for trends.
- If structure breaks (close beyond swing against position), exit the remainder at market.
- No adding to losers; add only on fresh signals that meet full entry criteria.
Routine: Daily, Weekly, Monthly
A tight routine removes decision fatigue. Dan front-loads thinking into prep, then follows the plan during live hours.
- Daily (pre-session): Mark 4-Hour trend, levels, and your A-setups; set alerts.
- During session: Execute only pre-defined setups; log entries/exits in real time.
- Weekly: Review all trades; tag mistakes (late entry, rule skip, over-size).
- Monthly: Re-compute expectancy (Win% × Avg Win – Loss% × Avg Loss) in R-terms.
Records That Actually Improve Results
He tracks data that leads to changes: expectancy, MAE/MFE, and rule adherence. The goal is to fix process leaks, not create pretty dashboards.
- Log each trade’s: setup tag, R-risked, R-result, MAE (worst adverse), MFE (best favorable).
- Track slippage and spread; remove instruments/time windows that bleed edge.
- Maintain a “rule-breach” column; any breach reduces size to 0.25% risk next 5 trades.
- Quarterly: cull the worst-performing setup tag if expectancy stays negative.
Psychology & Capital Integrity
Dan separates life money from trading capital to lower pressure. Lower pressure = clearer execution and fewer forced trades.
- Keep a separate, fully funded budget for living expenses; never “trade to pay bills.”
- After a loss streak of 3–4 trades, take a screen break or a full session off.
- Use pre-commitments: “If I break a rule, I stop trading for the day.”
- Reduce size by 50% after any week with 2+ rule breaches; earn size back via clean execution.
Market Selection & Sessions
He prefers markets that trend cleanly and respect levels. Trade when liquidity is healthy and spreads are predictable.
- Maintain a whitelist (e.g., liquid FX pairs, index futures, top-tier commodities).
- Avoid high-impact news windows unless your plan includes them explicitly.
- If spreads widen beyond historical norms, skip entries—even perfect signals.
- Cap simultaneous correlated positions (e.g., only one USD-heavy FX long at a time).
Playbook Setup: 4H Trend, 90M Pullback (Template)
This is the bread-and-butter setup you can run repeatedly. Keep it mechanical and let the stats compound.
- 4-Hour bias: Aroon(14) aligned; price above/below 20 & 50 EMA.
- Mark structure: Identify the last clean swing high/low and nearest SR zone.
- 90-Minute trigger: Pullback to 20 EMA; rejection candle; enter on break of trigger bar.
- Stop: Beyond swing structure (not arbitrary pips/ticks).
- Targets: Scale at +1R; trailer or fixed +2R/+3R.
Playbook Setup: Momentum Continuation After Tight Flag
When momentum is strong, flags form quickly. This setup joins the move with minimal lag.
- Confirm 4-Hour momentum: EMA alignment and strong Aroon bias.
- On a 90-minute chart, draw flag boundaries; wait for a candle close beyond the flag.
- Enter on first pullback to the breakout level; reject wick = green light.
- Stop: Other side of the flag.
- Targets: +1R scale; trail under/over 20 EMA until a full candle close against trend.
Risk Controls For Volatile Days
Volatility is opportunity and danger. Dan sets hard brakes so one session can’t wreck the week.
- Daily loss limit: 2R; stop trading for the day if hit.
- Trade limit: Max 5 trades/day; if you hit 3 losers, step away for 60–90 minutes.
- News filter: If VIX (or equivalent) spikes beyond a pre-set threshold, cut size by 50%.
- Break protocol: After any emotional trade, log it, then power down for at least 30 minutes.
Continuous Improvement: Simple Experiments
He tweaks one variable at a time and measures the impact. No wholesale system changes based on a small sample.
- Choose one lever (e.g., move the first scale from +1R to +0.8R) and test for 50–100 trades.
- Promote changes only if expectancy and drawdown improve.
- If two levers interact (e.g., stop method and target), test them as a pair in isolation.
- Archive failed experiments with notes so you don’t re-test the same dead ends.
“Do Not” List That Saves Accounts
Eliminating common errors protects the edge. Dan maintains a standing “no-go” list to keep the process clean.
- Do not trade without an initial stop in the ticket.
- Do not take counter-trend setups while Aroon confirms trend strength.
- Do not add to a loser—ever.
- Do not tweak rules mid-trade; log the impulse and stick to the plan.
Size risk is small and uniform; let R-multiples guide decisions.
Dan Shy keeps risk per trade tiny and consistent, so no single loss matters. He thinks in R-multiples from the start, defining the stop first and letting that distance dictate position size. Uniform sizing forces clean math and prevents emotional tilt after a winner or a loser. When R is standardized, performance becomes comparable across symbols and time frames.
With Dan Shy’s approach, targets are framed as 2R or 3R instead of random pips or points. If the structure breaks, he takes the -1R and moves on rather than widening stops. Over dozens of trades, the small, repeatable hit is the cost of doing business. The edge comes from stacking many 2R payoffs against disciplined -1R cuts.
Trade many qualified setups; avoid prediction, trust repeatable mechanics
Dan Shy doesn’t chase crystal-ball calls; he runs a playbook over and over. He filters for trend, location, and a simple trigger, then takes the next valid trade without overthinking. By stacking many small, qualified opportunities, he lets probability work instead of ego. One setup isn’t supposed to change your life; a hundred clean reps might.
For Dan Shy, prediction is replaced by process: same checklist, same risk, same management. If a signal is missing, he passes—no “gut feel” overrides. He logs outcomes in R-terms and judges the method by large-sample expectancy, not last Tuesday’s P&L. The result is consistent execution that compounds statistical edge while keeping emotions out of the driver’s seat.
Keep charts clean; 4H trend, 90M entries, strict stops
Dan Shy keeps charts minimal so decisions are fast and repeatable. He uses the 4-hour to define trend and key structure, then zooms to the 90-minute to time entries. Two EMAs to frame momentum and a simple confirmation keep him from turning charts into a Christmas tree. Clean charts reduce hesitation and make it obvious when the setup simply isn’t there.
On the 90-minute chart, Dan Shy looks for a pullback that respects structure, then places the stop just beyond the last swing. If the candle closes back through both EMAs, he stands down rather than rationalizing. The 4-hour bias must remain intact; if it flips, the trade idea is done. Strict stops protect the account first, so the next clean setup can do the heavy lifting.
Allocate by volatility; diversify instruments; cap correlated exposure and risk.k
Dan Shy sizes positions by volatility so each trade carries comparable risk regardless of the market. He normalizes usinthe recent range or ATR, so a wild instrument gets a smaller size while a calmer one gets more. This keeps the dollar risk per trade steady instead of letting contract count fool you. He avoids equal-lot thinking because equal size is unequal risk across instruments. By scaling to volatility, he preserves edge consistency and avoids blowups during regime shifts.
Dan Shy also diversifies by underlying, setup type, and holding duration to reduce reliance on any single edge. He caps correlated exposure, so multiple positions tied to the same theme don’t multiply risk when they move together. Portfolio heat is limited—if total open risk crosses a preset threshold, he stops adding trades. A strict daily loss limit forces him to power down before correlation spikes can compound damage.
Preplan exits and scaling; review data, enforce process discipline.e
Dan Shy decides the exit before he hits buy: partial at +1R, protect the rest, then either trail or target +2R to +3R. That precommitment kills hesitation and revenge tweaks mid-trade. If structure breaks, he’s out—no “just a little more room.” Scaling is mechanical too: bank some, move stop, and let the stats decide whether the runner earns more. He treats every trade as one of many, so preserving the next opportunity matters more than squeezing one more tick today.
After the trade, Dan Shy turns into a data hawk. He logs R-result, MAE/MFE, slippage, and any rule breach, then adjusts behavior, not beliefs. Expectancy is the scorecard; feelings don’t cut. Two breaches in a week? Size gets cut until compliance is flawless again. The cycle is simple: plan the exit, execute the plan, audit the execution, and enforce consequences that keep the process clean.
Dan Shy’s bottom line is disarmingly simple: stack small, repeatable edges across many trades and let the math work, not your ego. He built that mindset through years in the seat and professional money management, emphasizing that it’s never about any single winner or loser but the next hundred clean, rule-based executions. That perspective shows up everywhere in his playbook—uniform risk per trade, preplanned exits, and mechanical entries that follow a higher-timeframe trend—so you can judge results in R-terms over a large sample, not by whatever happened this morning.
Equally important, Dan kills “tick fever” by stepping away once orders and stops are set, returning only when the plan says to act again. That habit protects decision quality, keeps emotions from hijacking execution, and ensures the next setup gets the same clean process as the last. If you internalize just a few things—many-trades mindset, strict risk controls, clean charts, mechanical entries/exits, and scheduled disengagement—you’ll trade with more clarity and stay in the game long enough for your edge to compound.
