Sunday, January 8, 2012

3 month review with Diamond Setups

[Please note that these are strictly my own personal opinions based on my experience.  Your mileage may vary!]

Hard to believe it has already been (or only has been?) about 3 months since I signed up for Renato Santos' Diamond Setups (DS) program.  I've believed in this system from nearly the beginning when I first saw it after 2 weeks, and so far, it has continued to deliver just as Renato had advertised. 

For those who like to cut to the chase and avoid the babble, just skip this interview section and go towards the end.  But for those who like to hear the voices in my head regarding DS, read on...

Interviewer: So Grove, how has the DS system performed?

Grove Under: As advertised on Renato's site.  Over the past 3 months, his alerts have generated profits well into the triple digit ES points.  There have been stretches of up to 20-30 trades where he hasn't had a full stop loss.  Unbelievable.

I see it happening, all timestamped, in real time, and it's amazing to see.

I've tried to find something significantly wrong with the Diamond Setups system or with Renato, thinking that maybe this is some sort of scam or dream, but I've failed, so I've long since given up. 

Interviewer:  How have you personally done, Grove? 

GU:  Oh.  Uhmmm...  I've...[unintelligible mumbling]

Interviewer:  Why do you always avoid the "tough" questions?

GU:  OK, I'm still here.  I've had my ups and downs.  Did well on SIM in October for my first month.  Accidentally started trading live early November and then decided to continue live.

I was overconfident and when I hit a little rough patch, I went on tilt and lost about 25% of my portfolio in a matter of only a few days.  I obviously didn't follow the DS system during that time and went bezerk.

Interviewer:  OUCH!  Talk about choking, bro!!

GU:  Hey...c'mon man.  I'm answering the question honestly, not avoiding it!

So back to SIM I went for about a month to regroup and to continue finding the style of trading DS that works best for me (and still continuing to work on that now).

I started trading live again in early December with these results (all gross points):

Week Ending 12/09:  +16.75
Week Ending 12/16:  +3.50
Week Ending 12/23:  -6.25
Week Ending 12/30:  No trading
Week Ending 01/05:  -6.25

Interviewer:  Oh, I see a little rough patch going on the past few weeks?  Wouldn't just simply following the DS alerts have worked much better?  Then why don't you just simply take Renato's DS alerts?

GU:  The holiday trading volume got to me a bit.  Volume and volatility wasn't quite there as before.  Also ended up making many mental errors.

And yes, I significantly underperformed vs. blindly taking the DS alert trades.  But I'm trying to trade the DS system based on what works best for my style.  I'm working on getting to the point where I can trade without the alerts -- the whole "learning to fish" goal.

Interviewer:  If someone is giving away fresh fish, why don't you grab everything while you can before it goes bad, bro!!  Based on your holiday trading excuse for your recent performance, you must be starving.  Don't go bezerk again, man!

GU:  Dude...

Well, like anything else, there's time and "tuition expenses" involved with finding your way.  You have to find what works best for you and there's only one way to find out.

Just because you use Tiger Woods' golf clubs or Nadal's tennis racket and try and play their style, doesn't mean that you will be as successful as they are. 

Nor would a basketball player best suited for playing center be a great point guard, or vice versa.  We all have to find our strengths and play to them.

Interviewer:  Uh, maybe you shouldn't have used Tiger as an example.

GU:  OK, let's just imagine we're talking about this 10 year ago, happy now?

Interviewer:  Yes, maybe just a little.  So what's next?

GU:  I'm going to tighten down my trading plan which continues to revolve around DS, and work primarily on my ability to execute according to my plan.  I must focus on establishing a great process, not on my P&L.

And on a related note, I'll continue to strengthen my mental game, since that's critical for achieving those goals, and therefore, for my long term trading success. 

Interviewer:   OK, Grove, sounds like a good plan.  In all honesty, I really believe you're starting to get  there.  Let's catch up again in a few months and good luck!

GU:  Agreed.  Thank you, and I'll have much better news to report next time.

Here are my thoughts after 3 months with Diamond Setups:
  • First and foremost, I continue to believe the Diamond Setups methodology is solid. 
  • And it's Renato's support in his chatroom that really makes this all work.  If you were to try and learn only by simply reading the system's rules, you're only getting a small piece of the puzzle.  
  • Communicating with other members in the room with a similar trading style has also been extremely valuable.  Similar to what this blog has achieved, I've made some great new friends with like-minded traders.
  • Renato is a machine, very consistent and reliable, like clockwork.  If it weren't for a minor mistake on a rare occasion, I would have thought he was not human.
  • And if Renato does make a mistake, he's quick to apologize and admits the error.  How many Wall Street types do this regularly?
  • This is my first subscription to a chatroom service, so I can't comment -- but others have told me that Renato is very unique in this business because he is so patient, respectful, and very open about teaching you his system.
  • Humans have common sense and spatial recognition of market structures that can not be easily programmed into a mechanical system.  The DS rules seem to capitalize on this. 
  • You can tailor the DS rules to work in whatever timeframe and level of activity that matches your personality.  Finding what DS style works best for my personality is what has taken time for me to figure out.
  • The larger the timeframe (i.e. swing trading), the larger the stop. The stop could be upwards of 5 to 8 points or more.  But you could also catch 20-100 ES points on a good winner.
  • The lower the timeframe (i.e. scalping for +2 points), the smaller the stop.  The stop for scalping is usually around -2 points.
  • Renato would be the first to tell you that you need to find the style of trading Diamond Setups that works best for you.
  • So far, the consistency of DS is impressive, regardless of market volatility, and trend vs. non-trend days.  And based on what I've seen, it seems like a non-trend day with decent volatility is the sweet spot for DS.  Fine with me, since trend days only seem to take place 10-15% of the time.
  • Watching Renato trade is like watching and learning from a master magician. You know how the magic trick is done, but you're just in awe at how well it's consistently executed.  
  • He says he's like a bricklayer, simply putting up one brick (trade) at a time, eventually building up a big wall.  But I think magician sounds better.
  • Renato has a very interesting background.  Sometimes, I think he's the Brazilian version of "The Most Interesting Man in the World." 

Looking back over the past several months, I've found that signing up with DS has provided incredible benefits.  Watching a successful trader in action, consistently displaying great discipline, as well as having him openly explain why he's making his trades, has been extremely valuable.

Watching Renato make profits nearly every day has been an eye opener as well as great motivation for me.  If I had not seen this for myself, every day, in real time, all very transparent and timestamped, for the past 3 months, I would not have believed it.

Let's just say that even if I never trade again (not likely!), I would look back on this time with DS as one of my greatest experiences with trading.


@RenaTrader said...

Thank you so much for your kind words, Grove, much appreciated.

Anything is possible to those who have a burning desire to succeed in any industry, not different with trading.

Tomross58 said...

Hey Grove,,

That was a great post and very interesting to read. Its interesting mostly because its very honest.
You mention the things that are going through my mind as well as I continue in my journey. I am working very hard to find "my" style so that I too can one day fish. You brought up a very important point on how valuable the chatroom is and how lucky we are that Rena takes this time. He really loves what he is doing and admits to Love talking about the DS. He even offers his time to answer questions.
My goal is to be able to find the set-ups on my own. He has proven that just a handful of trades can yield 2-4-6 pts or more a day and then,,,,as he mentions,,,,do the same thing everyday. I want to earn the right to go live and then add size as I go along.
Putting off adding another contract until you earn the right as you mention sounds like someone that is working on being disciplined and a good trader. As we know the money will follow. Keep it up.


Grove Under said...

Hi Tom:
Thanks for the comment, and great to hear you're finding your way! Until you mentioned it, I didn't really realize that my decision to stay at 1 contract was a sign of discipline, but you're right. Thanks as always for the great feedback.

Larry said...

Hi Grove,

Are you still using the Diamond Setups for your trading? It has been almost one year since you blogged anything about it. Hoping to get more of your honest feedback.


Grove Under said...

Hi Larry,

Sorry about the late reply. I'm not using DS in the exact way that Renato teaches it, but there are many elements of it that continue to be a part of how I trade.

The time I spent with Renato was very valuable to me, so if I had to do it again, I would sign up again. To me, he is a great teacher and person.

One point Renato always stressed is that you need to take what he teaches, and then make it your own, so that it works with your personality and style.

I'm still on that journey if finding what works best for me, but a year later, I look back and believe I'm making good progress.

I've also met some great people from his room who I continue to stay in touch with, and that's something that has been just as valuable as what I learned about DS.

Hope that helps, but let me know if you have any other questions.

Anonymous said...

Hello Grove,

I'm not sure you even still follow these comments, but here goes...

Three years later, are you still using anything you learned from renatrader? I've spent so much money on software, courses, and methods which didn't work long-term, that I really don't want to do it again...

The diamond setups look interesting, but the results which renato publishes on his blog honestly simply look too good to be true...

I'm sure there has to be SOME method out there that really is this good, but how can one know? Renatrader doesn't give free trials or any way to verify the results he posts. To shell over $875 to yet another vendor without any verification is just not something I want to do anymore...

I'd love to get your input on this...



Grove Under said...

Hi Phil,

I'm glad I was able to catch note of your comment before it slipped through the cracks.

It has been years, so I had to think about it. But the answer is yes, there are some things that I'm still using from what I learned from Renatrader.

But it's not such a clear cut answer, because much of what I have learned over the years has evolved from so many different sources.

Do I trade exactly as he taught? No. And I have to imagine that not many of his students (including his successful ones) trades exactly as he teaches. However, there are still some tools that I use based on what I learned from him.

One thing to keep in mind is that I'm pretty sure you won't learn how to trade successfully from just one source. You probably already know -- it's a matter of learning and exploring various systems to eventually determine what works best for your personality.

So even if someone handed you the holy grail of trading, there's a good chance you won't be consistently successful over the long term. Because it will not likely match your personality.

Knowing what I know now, if I were to go back in time, would I make the same decision to learn from him? I haven't spoken or been in communication with him for years, but my answer would be yes, absolutely. And I'm sure there are others who would say no.

If cost is a factor, there are people these days who are giving out high quality and very helpful trading education for free.

One great example is FuturesTrader71 who has a daily live YouTube broadcast before the market open that is very helpful, especially with regards to seeing his process. That's why I believe his webinars are great even if you're not that interested in the volume profile method analyzing the markets.

I'm with you on spending money on software, courses, etc. I love learning, so I'll probably continue to spend money on courses, education, etc. But I've found that ultimately, there are a few simple concepts that can make money over the long term.

The toughest part is having the right mental frame of mind to be able to execute the strategy consistently over time, and to NOT trade when the conditions are not ideal. Doing nothing -- now that can be really difficult!

Hope that helps, but let me know if you have any other questions. And feel free to email me directly via the link under my profile if that's easier.


Anonymous said...

Hi Grove,

Thanks for your reply. I couldn't find your email address, so I'm posting here again. Can you tell me (as far as you remember) to what extent the method/setups are objective/subjective? I don't have a big problem following someone else's setup if the rules are clear and mechanical. I.e. if a happens then do b.

But what I've often seen is vendors selling wonderful methods which then ended up depending on subjective factors. "Well, I wouldn't have taken the setup THAT time as xyz", when xyz was never before mentioned, or isn't something that is clear for all to see.

I don't know whether you remember, but are the calls in his trading room called out before they happen, with clear targets, stops etc?

Thanks so much

Grove Under said...

Hi Phil,

Yes, assuming things haven't change over the past few years, the alerts are called out in advance, but they are often given as support or resistance areas that are a couple or so points wide. Therefore, depending on whether you enter at the level closer or farther aware, it will change your stop loss amount (and therefore your R:R). There is that element of discretion.

But as far as the rules are concerned, yes, I thought they are pretty detailed, but there might be some aspects that wouldn't enable me to code it in a totally automated/mechanical system. Therefore, there could be instances where you would enter a setup a certain way, but I would execute it slightly differently.

Going back to the topic again, I think it comes down to how comfortable you feel about certain styles of trading. I could give you the holy grail system on how to trade breakouts, but if your style is better suited for pullbacks, even my holy grail system won't work for you over the long term.

And unless you're purchasing a 100% mechanical system that can be hard coded, even if there's as little as 5% discretion involved, I believe you'll never be able to consistently replicate the performance claims from a vendor.

So my approach and expectation has been to try and learn what any particular service provides, and see if there's something that would work for me. If it does, great. If it doesn't, also fine, since then I discovered what doesn't work for me.

Yes, there have been many duds and ripoffs along the way, to the tune of well into the 10's of thousands of $'s over the decades. But again, I see that as a learning and educational experience (and tuition).

Hope this helps some more. The whole G+ switchover might have buried my contact info. So if you'd like to contact me further, feel free to reach me at: underthegrove via gmail dot com.


Unknown said...

Very good interview and posts.

Unknown said...

Very good interview and posts.