Australia Traders: Neil Fuller Price Action & Roger Montgomery Value

Australia has produced some of the most respected names in global trading and investing. Among them, Neil Fuller is known for his price action trading strategies in forex and stocks, while Roger Montgomery has built his reputation as a leading value investor, adapting Warren Buffett’s philosophy to Australian markets. Together, they represent two different paths – short-term disciplined trading and long-term business-focused investing – that continue to shape how traders and investors in Australia approach financial markets.

Neil Fuller

Neil Fuller is a renowned professional trader and mentor from Australia, specializing in forex and stock market trading. He gained widespread recognition for his pragmatic and disciplined approach to trading.

He began his trading journey at the age of 18. By his own admission, his first 10 years of trading were unprofitable, which toughened his character and forced him to develop his own strategy.

He is a prominent representative of Price Action (analysis of pure price movement) and level-based trading. His approach is minimalist: he uses only a few moving averages (often EMA 21 and EMA 100) and horizontal support and resistance levels, completely avoiding indicators and automated advisors.

Neil Fuller actively shares his knowledge through:

A YouTube channel, where he analyzes markets and his trades daily in real-time.
Paid courses and mentorship programs.
An active presence on social media.

He is known for his straightforwardness, no-nonsense teaching style, and focus on real trading rather than theory. He has built a reputation as a trader who says what he thinks and does not make unrealistic promises.

Here are the key elements and strategies promoted by Neil Fuller:

1. Philosophy and Core Principles

Price Action Trading: Neil Fuller does not use standard indicators (such as moving averages, RSI, MACD, etc.) in his core analysis. He believes that everything needed is already reflected in the price and volume.
Key Levels: The foundation of his strategy. These are horizontal support and resistance levels that the market has tested repeatedly and which hold high significance. Entries are sought precisely from these levels.
Volume Analysis: Unlike many classical price action traders, Fuller actively uses volume to confirm signals. He looks at the volume that occurred on a specific candlestick or in a particular price area to understand who controls the market—buyers or sellers.
Stop-Loss and Risk Management: This is perhaps the most important aspect of his teachings. He always advocates for strict capital management:
- Risk per trade is no more than 1-2% of the deposit.
- A stop-loss is set before entering a trade.
- The profit-to-loss ratio (Risk/Reward) should always be at least 1:2 or higher.
Engulfing Patterns: This is one of his favorite entry signals, especially when it appears near a key level.

2. Specific Strategies and Setups

Neil Fuller teaches several specific models for market entry. Here are the most famous ones:

a) “False Break” or “Liquidity Grab”
This is probably his most famous strategy.

Essence: Large players (“smart money”) often intentionally “run” the stop-losses of retail traders, which cluster below support or above resistance.
Scenario:
1. The price approaches a strong key level.
2. A sharp breakout of the level occurs, but it fails to consolidate.
3. The price quickly returns back into the range (back above/below the level).
4. This false breakout is visible on the chart as a long tail (wick/shadow) on the candlestick—a “Pin Bar” or an engulfing pattern.
5. Volume during the false breakout is usually high, confirming activity.
Entry: Opening a position towards the level (against the breakout) after the close of the candlestick that formed the false break. The stop-loss is placed beyond the extreme of that candlestick.

b) “Break and Retest”
A classic strategy that Fuller adapts to his style.

Essence: After a genuine breakout of a strong level, the price often retraces back to it to test it, now as support (if the breakout was to the upside) or resistance (if it was to the downside).
Scenario:
1. The price breaks through a key level and consolidates beyond it.
2. A retracement back to this level occurs.
3. The level should now play the opposite role (support becomes resistance and vice versa).
4. The level “holds”—the price bounces off it, forming a reversal candlestick pattern (e.g., a pin bar or an engulfing pattern).
Entry: Buying on the bounce from former resistance (now support) or selling on the bounce from former support (now resistance).

c) Trading from Liquidity Pools
Fuller often says that the market moves towards areas where many orders are concentrated (stop-losses and take-profits), i.e., towards liquidity. The breakout of these zones gives the market energy for further movement.

3. What Timeframes Does He Use?

Neil Fuller recommends working on higher timeframes (HTF) because it is easier to identify truly significant levels on them. His main analysis is conducted on:

Daily (D1) and Hourly (H1) charts.

He uses the daily chart to identify the main levels and the overall trend, and looks for precise entry points on the hourly chart using the setups described above.

4. Criticism and Important Points to Understand

Not a “Holy Grail”: Neil Fuller’s strategies, like any others, do not guarantee 100% profit. They require a deep understanding of the market, practice, and iron discipline.
Subjectivity: The definition of a “strong” level and patterns can be subjective. The same chart may look different to two different traders.
Requires Patience: Quality signals at key levels do not appear often. A lot of time is spent waiting and analyzing.
Education, Not Signals: Fuller himself constantly emphasizes that he teaches people to think like a trader, rather than giving ready-made signals. Most of his materials are paid (courses, mentorship).

Where to Find Information?

Neil Fuller’s YouTube Channel: He has a free channel where he analyzes the current market situation, provides examples of his strategies, and answers questions. This is the best way to get acquainted with his style for free.
His Official Website: Information about paid courses and training programs is available there.

Summary: Neil Fuller’s strategy is a structured approach to trading based on price action, volume, and key levels with extremely strict risk management. It is suitable for disciplined traders who prefer “clean” charts without indicators and are willing to spend time on learning and practice.

Here are three key lessons from Neil Fuller’s trading philosophy that he constantly emphasizes:

Lesson 1: Trade Only From Key Levels

This is the cornerstone of Neil Fuller’s entire approach. He does not look for complex indicators or patterns all over the chart. Instead, he focuses on a few, but high-quality levels.

Key levels are areas on the chart where the price has reversed in the past or where there has been a significant concentration of volume (bullish or bearish bars). These can be:
- Support and Resistance levels.
- Swing Highs and Swing Lows.
- The Daily Open level for intraday trading.
Why it’s important: The price is more likely to react at these levels. They represent areas where the market has made decisions before. Trading in the “empty” space between levels is gambling, not a calculated strategy.
How to apply: Mark 3-5 of the most obvious key levels on your chart. Wait for the price to approach one of them, and then look for Price Action patterns there for an entry.

Lesson 2: Look for Confirmation in the Form of Price Action Patterns

When the price approaches a key level, it is not enough to just open a trade. Neil Fuller teaches to patiently wait for confirmation from the market in the form of specific candlestick patterns.

The entry signal comes from simple and understandable patterns:
- Pin Bar: Fuller’s favorite pattern. The long tail shows a rejection of the price and a bounce from the level.
- Engulfing Bar: A bullish engulfing at support or a bearish engulfing at resistance shows a shift in control.
- Inside Bar: A pause and consolidation after a strong move, often foreshadowing a trend continuation.
Why it’s important: These patterns show that other traders also see this level and are acting, creating movement. This is objective proof that your idea has strength.
How to apply: Price has approached a key level -> wait for one of the patterns to form -> open a trade only after the pattern has closed.

Lesson 3: Impeccable Risk Management and Discipline

This is perhaps the most important lesson. You can have the best strategy in the world, but without proper capital management and discipline, you will not be profitable. Neil Fuller places special emphasis on this.

The essence:
1. Stop-Loss: Always set a stop-loss. For patterns like a pin bar, the stop is usually placed beyond its extreme (its tail).
2. Risk Per Trade: Never risk more than 1-2% of your account balance on a single trade. This protects you from blowing up your account after a series of losses.
3. Risk/Reward Ratio: Aim for targets where the potential profit is at least 1.5-2 times your risk (R:R = 1:1.5, 1:2 or higher).
4. Discipline: Trade only your plans. Do not add to a losing position (do not average down). Do not overtrade. If there are no high-quality setups — stay out of the market.
Why it’s important: Risk management preserves your capital during drawdown periods and allows you to stay in the market long enough to catch truly big moves.
How to apply: Before each trade, calculate the position size based on the distance to your stop-loss and the 1% risk rule. Do not enter a trade if you cannot achieve an adequate R:R ratio.

Key Takeaway from Neil Fuller:

“Trade less, watch more. Be selective. It’s better to miss 10 good setups than to enter one bad one.”

His approach is not about complexity, but about patience, discipline, and the consistent execution of simple rules at high-quality areas on the chart.

Roger Montgomery

Roger Montgomery is a renowned Australian investor, fund manager, entrepreneur, and author of books on investing based on the principles of value investing.

He is the founder and Chief Investment Officer of Montgomery Investment Management and The Montgomery Fund. His company manages assets by applying a philosophy of long-term investment in high-quality companies at reasonable prices.

He is best known to the general public as the author of bestselling books on investing:

“Value.able” (2010) — his first and most famous book, which became a cult classic in Australia and sold in enormous quantities. In it, he outlines his approach to assessing the intrinsic value of stocks.
“Fund.able” (2022) — a book dedicated to helping entrepreneurs build a business that will be attractive to investors.
He regularly appears as an expert commentator on Australian television channels (ABC, Sky News), writes columns for business publications (Australian Financial Review), and maintains his own blog where he shares his ideas and market analysis.
He holds degrees in business and law.
Roger Montgomery is one of the most influential proponents of value investing in Australia, who transformed Warren Buffett’s complex principles into a system accessible to the private investor and successfully applies it in practice through his investment fund.

The Core Essence of the Strategy

Montgomery’s strategy is not about short-term trading, but rather long-term investment in high-quality companies at a reasonable price. He is a follower of the Buffett and Graham school of thought, but with his own unique valuation methodology.

His philosophy can be expressed in three points:

Buy an outstanding business (not just a stock).
Buy it at a fair price (avoiding overpayment).
Hold it for a long time, allowing the quality of the business to generate returns.

Key Concepts and Principles

Value vs. Price
Montgomery strictly separates these concepts. Price is what you pay for a share on the exchange. Value (or intrinsic worth) is what the business actually is. The investor’s task is to buy value at a price significantly below this worth.
Key Metric: Return on Equity (ROE)
This is the cornerstone of Montgomery’s entire strategy. He considers ROE the best indicator of business quality.

Formula: ROE = (Net Profit / Shareholders’ Equity) * 100%
What it shows: How effectively a company’s management uses shareholder capital to generate profit.
Montgomery’s Requirement: Only companies with a consistently high ROE (above 15-20%) over many years (a minimum of 5 years) should be of interest. A high and stable ROE is a sign of a company’s “economic moat” (competitive advantage).

Intrinsic Value and the “SIMPLE” Formula
Montgomery developed his own model for calculating a company’s intrinsic value, which he called SIMPLE (Sustainable Income Model for Price Leverage to Earnings).

The essence of the model: It estimates what a company is worth based on its ability to generate profit in the future, not its assets.
How it’s used: After calculating the intrinsic value using the SIMPLE model, an investor can compare it to the current market capitalization. If the market price is significantly lower than the calculated value, the company is considered undervalued.

Economic Moat
Like Buffett, Montgomery looks for companies with a wide and sustainable “economic moat” — a competitive advantage that protects the business from competitors and allows it to maintain high profitability. This can be:

Brand recognition (Coca-Cola, Apple)
Technological leadership (TSMC)
Economies of scale (Amazon)
High switching costs (Microsoft)
Government licenses and patents

Montgomery’s Step-by-Step Stock Selection Algorithm

ROE Screening: Select companies with a stable ROE > 15-20% over the last 5-10 years. This immediately filters out most low-quality companies.
Competitive Advantage Analysis: Study the remaining list. Why do these companies have such a high ROE? What is their “economic moat”? Ensure this advantage is sustainable.
Intrinsic Value Calculation: For the companies that passed the first filter, calculate the intrinsic value using the SIMPLE model or another DCF (Discounted Cash Flow) model.
Price vs. Value Comparison: Compare the company’s current market capitalization with its calculated intrinsic value.
- Price << Value: Buy signal.
- Price ≈ Value: The company is fairly valued. Can hold, but not a buy.
- Price > Value: The company is overvalued. Signal to sell or avoid.
Management Analysis: Assess the quality of management. Do they act in the interests of shareholders? Do they have a stake in the business?
Long-Term Ownership: After buying such a company, be prepared to hold it for years, as long as it remains high-quality and does not become significantly overvalued.

Three Key Lessons in Trading and Investing from Roger Montgomery’s Philosophy

Lesson 1: Invest in Businesses, Not in Stocks

The Core Lesson: A stock is not just a ticker on a screen or an abstract chart. It is a share in a real business. Before you buy a stock, you must understand that company’s business model as well as if you were buying the entire company.

What this means in practice:

Deep Analysis: Instead of tracking short-term price fluctuations, analyze the company’s financial reports (income statement, balance sheet, cash flow statement).
Economic Moat (Competitive Moat): Look for companies with a sustainable competitive advantage that protects their profits from competitors. This could be a strong brand, a patent, unique technology, or economies of scale.
Montgomery’s Conclusion: “If you don’t understand the business, you shouldn’t invest in it.”

Lesson 2: Price and Value Are Not the Same Thing. Pay Less Than What the Asset is Worth.

The Core Lesson: The market is often irrational and can offer shares of wonderful companies at discounted prices (due to bad news, general pessimism, etc.) or sell mediocre companies at inflated prices (on a wave of hype). The investor’s task is to find this discrepancy.

What this means in practice:

Assess the Intrinsic Value: Use valuation methods (like his own SIVA methodology) to calculate what a stock should actually be worth based on the company’s future cash flows and profits.
Margin of Safety: Always buy with a “margin of safety.” That is, if your estimated value of a stock is $100, buy it for $70 or less. This is your buffer in case of calculation errors or unforeseen problems.
Montgomery’s Conclusion: “The goal is not to buy good stocks, but to buy good stocks at an excellent price.”

Lesson 3: Discipline and a Long-Term Perspective Are Your Greatest Allies

The Core Lesson: Emotions are the enemy of a successful investor. Greed makes you buy at peaks, and fear makes you sell at lows. Success comes to those who adhere to a disciplined strategy and think in terms of years, not days or weeks.

What this means in practice:

Ignore the Noise: Do not succumb to the panic or euphoria of the financial media. Your decision should be based on the company’s fundamental metrics, not on newspaper headlines.
Be Patient: Allow quality companies to grow and increase their value over time. The power of compound interest is the most powerful tool in your arsenal.
Montgomery’s Conclusion: “It is better to own a wonderful company for a long time than to jump from one average company to another.”