Fibonacci, Futures, and Full-Time Trading: Lessons from TradingWarz

Join Andrew Wilkinson as he dives into the world of trading with Richard Dhanpaul, the creator of TradingWarz on YouTube. Discover how Richard turned Fibonacci, risk management, and futures trading into his unique approach, growing his channel into a hub for thousands of traders worldwide.

Summary – IBKR Podcasts Ep. 213

The following is a summary of a live audio recording and may contain errors in spelling or grammar. Although IBKR has edited for clarity no material changes have been made.

Andrew Wilkinson  

Welcome to this special episode from IBKR Podcasts. I’m delighted to chat with Richard Dhanpaul, who curates content on YouTube under the mantle of TradingWarz. Welcome, Richard. How are you? 

Richard Dhanpaul  

I’m good. Thank you so much for having me. A pleasure. I’m excited to have this conversation and just share some of my experience with your audience. 

Andrew Wilkinson  

It’s great to meet you. For the last two years, just for the benefit of the audience, Richard has been independently creating video content to help the IBKR community. So, Trading Wars is spelled with a Z at the end, right, Richard? Tell us a little bit about the TradingWarz channel, what it does, and why you started it. 

Richard Dhanpaul  

So, I’m going to go back to the beginning of my story. Coming up in an immigrant family in Toronto—I was born and raised in Toronto—I was taught that the stock market was, you know, a gamble and a scam. There was always a lot of fear because of just a lack of understanding. So, later on in my career, I became a CPA and spent time working at the Big Four. 

During that time, I got exposed to working in asset management, private equity, and banking. And that’s when I really started to understand that, hey, you know, some people do this for a living. And if you can have the right risk parameters involved and if you can do it professionally, you can make a living off of this. You can make some money off of this. 

So, I started to get really interested during that time. And then when I got interested during that time, I started trading. I started off with options. I didn’t do too well in the beginning when I first started off. I was chasing, you know, weeklies like a lot of people do. And I got introduced to futures markets. That’s really where my Interactive Brokers journey started with futures trading because it was one of the few brokers that offered futures with great commissions and fast fills. That’s what I needed in order to get in and out quickly. And I started trading futures. 

From there, when I came over to the United States, I decided that, hey, I started sharing some ideas, some content. One of my friends said, “Why not?” I was very influenced by Fibonacci trading and I developed my own style with fibs and my own levels. And just through trial and error and through winning some and losing some trades, I created my own content basically. 

And that’s when I decided to just share my ideas through TradingWarz. And by sharing that, you know, people have caught on. I share a lot of free picks every day. I actually post free picks, and from there, people have followed me and subscribed to my Twitter “X” account and YouTube. And you know, now I’m over 118,000 on X and over 36,000 on YouTube. So, I’m just grateful for that. Grateful for the journey. You know, my main message is, for me, it’s always focusing on the risk and understanding what’s at stake, but also making sure that your reward is always a positive ratio. 

For example, not risking $1,000 to make $100. You’re never going to be profitable if you have that mentality. But I’m always trying to do doubles or singles or triples if I can. So, risking $1,000 to make $2,000 or $3,000. And you know, what I was mentioning earlier, just the win rates. So, with a two-to-one risk-reward from a mathematical perspective, for every hundred trades, if you win 34, 35 trades, you’re still gonna walk away with some type of profit. You know, obviously, there are commissions and other things involved, but just on the basic high level. So, that’s where all my content came from—that passion for the Fibonacci, the math, the risk-to-reward. And I’m grateful today that I’ve been able to get so many followers and people following my journey. 

Andrew Wilkinson 

So, I think I heard earlier that you’ve written a few books as well. 

Richard Dhanpaul  

I have four books, and those books are great because it’s kind of like a story of my life and me in trading. I have the very first Fibonacci book that I wrote, which was more theoretical and more like, you know, “This is what I know about Fibonacci. This is what I’ve done. I love Fibonacci.” And then, recently, the latest book that I wrote, The Power of the 618 Fibonacci, is actually like my trades—my real trades, my broker statements, some video recordings that I took from my trades, and documenting a journey. 

So, that’s where I’ve refined my entry, refined my stop loss, refined my target. And so, the books I write are kind of like my story, my journey. And the people that read it, they get to see my experience and what I’ve been through with real trades, you know. 

My goal was always to write something that was really me, what I did. Because I feel like that’s what I wanted when I started reading content and started learning trading. I was like, “It’s great you have this strategy, it’s great, but walk me through what happened in 2024. What did you do? You know, what were your wins, your losses, your ups, your downs?” So, that’s the content that I try to focus on these days. And my latest book is like that. I’m actually probably gonna do a part two, which is gonna be all of my 2024 trades related to futures and discussing that—the drawdown, the upside, the risk, the reward, and everything like that. 

Andrew Wilkinson 

Tell us about the asset classes you trade. You mentioned you started off with options and it was a bit of a failure to begin with, but let’s go into the asset classes that you do trade now. 

Richard Dhanpaul 

So right now, my main goal, my main strategy, is long-term investing in the key companies I want to hold for the future, which is basically tech, right? And using that capital invested in tech, with a margin account, what I use is I can leverage that cash. It’s basically a cash equivalent to trade futures contracts. 

Futures contracts I mainly trade are the NQ and the ES. I started off with the minis because my account was too small to trade larger contracts. Now I trade larger contracts, full-size contracts. And the goal for me with that is to kind of generate cash flow because when you’re using margin and stuff like that, there’s a risk to holding overnight. There’s a risk for holding for a long time. So, I try to generate 10, 20, 30 points if I can of gains. And I try to risk 5 to 10 points and try to keep this ratio in balance. Two to one, three to one, four to one—trying to keep that in balance for my trades. 

Every single day, I’m looking for an ES trade. Every single day, because I find that with Fibonacci and my experience, it has a great synergy that I like to trade with. NQ as well, but I feel like NQ from my experience is a lot more volatile. The wicks on NQ can stop you out. They can push you out. So, I really try to focus on ES. But with NQ, when I’m looking at the bigger picture—weekly chart, daily chart, monthly chart—I’m using that tool to be involved. And then I also have my long-term investments. 

And I’m back into options for a few years now. I kind of understand now how to use them better, when’s the right time to use them. For example, with options, I’m always looking for a 5–10% drop on large caps. One of my personal trades was taking Tesla a few weeks back at 336, right? And I’m using that Fibonacci retracement tool. The 61.8% Fibonacci is lining up with about a 10% drop in Tesla to buy calls six months out. 

That’s one of the things I’m doing now with options. And because I’m using the Fibonacci to allow me to kind of handle the Greeks, I’ve been doing a lot better with options. So, options I definitely think are a great tool because the capital requirement is a lot different than futures, right? And you don’t need a margin account. You can do a cash account. But having a strategy and the right balance behind it is very important. And you gotta know, you know, what are you doing? Are you selling premiums? Are you doing spreads? You know, are you buying naked calls and puts? There are so many different avenues. So, I try to focus on using the fibs to line up with my naked calls or puts. 

What I put in is what I’m willing to risk. I know that upfront and I know that’s my maximum potential loss if I’m just using straight calls as an example. 

Andrew Wilkinson 

Okay, you mentioned Fibs, Fibonacci, 61.8% a lot. Take us down that rabbit hole. Talk about Fibonacci lines of retracement and how you use them. 

Richard Dhanpaul 

Yeah, so that’s a great question. The story of Fibonacci is a mathematical ratio—the golden ratio. It’s found in nature, in the universe, in outer space. There are these proportions. And trading is human psychology, really. It’s human psychology; it’s people trading, human trading. Even if it’s a robot trading, that robot has roots within, you know, human programming. And because of that natural side of it, when you’re looking at human interactions, human relations, psychology, these mathematical ratios sometimes show themselves through the interactions of buying and selling. 

What I noticed personally, for me, when I’m trading is, if a 61.8% Fibonacci comes into play, I break it down into layers. You have intraday, and you have your swings and your bigger picture 

and your intraday. You pull up a five-minute chart on SPY, and one of the things I do on X (Twitter), one of the things I do on YouTube, is I show these examples every single week. You’re going to get at least one good trade, in my opinion. That’s what I see—there’s always at least one good 61.8% Fibonacci level. 

So, let’s say in the first hour of the day, the S&P 500 is rallying or pulling back. The 61.8% Fibonacci retracement is a tool to measure that pullback. So, if we go from 0 to 10, you take your Fibonacci tool from 0 to 10, and the 61.8% is going to line up somewhere around 4. That’s where you’re buying—around 4. 

The question is on the way from 0 to 10, where do you want to buy? Fibonacci says, “Hey, buy around 4.” That’s around 62% of the last move. And that’s where I fell in love with Fibonacci because I realized I was always getting in lower. I’m getting in lower than the last high, and because of that, I can manage my risk better. 

For example, if I buy at 4 and the price goes to 12, I’m better off than if I had bought at 10. You’re also getting the premium decay on the way down. A lot of times, when I use conditional orders—for example, on Interactive Brokers—if the chart is red as it comes down into my order, it hits the condition, fills the option, and then bounces. I’m already up a little money right away because I was first to the party. That’s how I like to think about it. 

There’s also the risk that it just keeps going down, right? But generally speaking, from my experience, what I see is that we at least hold that level a little bit. Of course, there are times when it just slices through—it could be news, it could be anything—but if I bought at 4, my risk if it goes lower is not as much as if I bought at 10. 

That’s what really got me into Fibonacci. Every week, every month, seeing these reactions—it really just blew my mind. Like, today, for example, I took a Fibonacci trade before I did this call with you guys. We had a 10-point reaction today on the 61.8% Fibonacci. Last week’s low was based on the unemployment data, right? We had that low as the anchor, and then the all-time high. If you draw your Fibonacci from low to high, you can look on a chart and see the reaction at 61.8%. 

Those reactions get me excited because I know I’m onto something. I’m on a level that maybe an institution is on, maybe somebody else is on, maybe there’s a robot on that level. I don’t know, right? But I know it gives me a good chance to hit the risk-to-reward ratio I want to achieve. 

Andrew Wilkinson 

What do you think investors need to be aware of before they start trading futures products and margin requirements? 

Richard Dhanpaul 

I mean, margin cuts both ways. It’s a great tool to grow your account, but it’s also a great tool to blow up your account. If you don’t have a stop-loss and you’re trading futures, you can get margin-called once you go below the required balance. 

For me personally, I always have a stop-loss because futures are such highly leveraged instruments. You can’t get away with, “Oh, I bought some calls, and they went to zero.” You can’t get away with that. If the index goes down forever—which is unlikely—but if it does, and you’re over-leveraged, you’re going to get margin-called. So, it’s very important to know your risk. 

The general rule of thumb I tell people is this risk five points to make ten points. If you’re doing ES, five points is $250. If you’re doing MES, it’s $25 because it’s $5 per point. If you have a small account, are you comfortable risking $25? Are you comfortable risking $50 a trade? If you’re comfortable with that and it fits your risk parameters, then you can develop a system. 

The math is beautiful on paper, but it fails if you don’t have a stop-loss, if you don’t take your targets, or if you don’t have control. The emotional discipline and the strategy are what allow you to implement it successfully. 

For me, I have a team and a community that keeps me accountable, so I don’t do things like over-leverage or hold losing trades. When you’re by yourself, it’s hard because you think you can always make it back or make more. You have to overcome those psychological hurdles to succeed, and you need a structured plan. 

Andrew Wilkinson 

Can you do this full-time yet? 

Richard Dhanpaul 

Yeah, definitely. That’s how I got into this—my mentor was doing it full-time. I didn’t believe it, honestly. I didn’t believe it because of the background I came from. But when I saw it and started following the trades, I realized it was possible. 

My mentor and I do completely different trades, which is what makes it even more beautiful—there are so many ways to trade. Nothing works all the time, but at some point, something is going to work. Fibonacci might not work tomorrow, but it might work next month. RSI, MACD, double bottoms, double tops, pennants—these patterns will have winners and losers. 

That’s why you can do it for a living—because there’s always an opportunity. You just need to control the risk to become profitable. Personally, I aim for at least a three-to-one risk-reward. My average risk-reward ratio for the year is four-to-one. If I’m risking $100, I’m trying to make $400. 

With a three-to-one ratio, let’s say you have 10 trades. If you win three out of 10, you’re still profitable. The problem is people focus too much on winning every trade. When a trade goes against them, they don’t accept it, and they average down or don’t take the stop-loss. What could have been a five-point loss turns into a fifty-point loss. 

Once you understand the math, it’s easier to do it for a living. But it’s not for everyone. It’s a battle with yourself—your discipline, your ability to push the buttons, and your emotional control. You have to develop those skills to succeed. 

Andrew Wilkinson 

You mentioned this before we started recording, but there are tax implications with futures contracts, right? 

Richard Dhanpaul 

Yeah, generally speaking, the tax rate for futures is lower than for equities. That’s one of the things that fascinated me about futures—they have their own tax code, their own tax section. I thought, “Wow, that’s kind of weird. Why is it lower to trade futures?” 

That was another reason I got into it—not just for tax purposes, but also for the flexibility of trading overnight. Futures allow you to manage risk better because they trade almost 24/7. For example, if your stop-loss gets triggered, you’re protected even outside regular market hours. There’s a short break when the market closes around 400 PM to 436 PM, but futures reopen after that. 

If there’s a gap down overnight in equities, you could lose a lot more than intended because your stop-loss won’t trigger until the market opens. With futures, you can manage that risk better. Futures even open on Sundays at 600 PM, so you can enter trades before Monday if your setup is ready. It’s a very powerful tool. 

Andrew Wilkinson 

Brilliant. Richard, thank you very much for taking the time to join me today on this podcast. 

Richard Dhanpaul 

Thank you very much. 

Andrew Wilkinson

And to the audience, don’t forget to check out Richard’s playlist on YouTube. It’s called TradingWarz with a Z at the end. And remember to subscribe to future IBKR episodes wherever you download your podcasts. 

Richard Dhanpaul 

Thank you, guys. 

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