Who Are YOU...As a TRADER? It Matters More Than You Think!
Summary
TLDRIn this insightful lecture, Jared Wesley emphasizes the importance of self-awareness and objectivity in trading. He argues that many traders fail because they don't accurately assess their personal strengths, weaknesses, and constraints. Wesley stresses the need to track trades, set realistic goals, and build a trading plan that aligns with one's personality and circumstances. He also highlights the value of experience and continual learning in the trading journey, urging traders to be patient and to expect a gradual path towards profitability.
Takeaways
- 🎯 Understand Your Trader Identity: Recognize the difference between who you think you are as a trader and who you truly are. This self-awareness is crucial for developing a successful trading strategy.
- 🚫 Overcoming Bias: Be aware of subjective biases and strive for objectivity in your trading decisions. Track your trades and use tools like video recording to help uncover unconscious biases.
- 📈 Align Trading Goals with Personal Capabilities: Your trading goals should be realistic and in line with your personality traits, time constraints, capital, and intangible skills.
- 📊 Chart Patterns and Personal Fit: Choose chart patterns that match your patience level and risk tolerance. For instance, avoid patterns that require long hold times if you're not patient.
- 💡 Manage Expectations: Different trading patterns have different success rates and behaviors. Understand what to expect from each pattern and adjust your strategy accordingly.
- 🔄 Gradual Progress: Increasing risk levels and changing trading styles should be done gradually to avoid surprises and不适应.
- 📝 Track and Review Trades: Maintain a detailed record of your trades and review them regularly to learn from your experiences and improve your strategy.
- 🕒 Time Management: Ensure your trading strategy fits within your available time. If you can't monitor a trade for hours, avoid strategies that require you to do so.
- 💰 Capital Management: Be mindful of your account size and ensure your trading goals are achievable with the capital you have.
- 🛠️ Continuous Improvement: Embrace the learning process and be open to making changes based on your review of trades and performance.
- 📉 Acceptance of Losses: Understand that losses are part of trading. Develop a plan to handle them and don't let them disrupt your overall strategy.
Q & A
What is the main topic of Jared Wesley's lecture?
-The main topic of Jared Wesley's lecture is about understanding who you are as a trader, recognizing the differences between your perceived self and your true trading identity, and how to become a better trader by being more objective.
Why does Jared emphasize the importance of objectivity in trading?
-Jared emphasizes the importance of objectivity in trading because it helps traders to rid themselves of subjective biases that can lead to poor decision making. Objectivity allows traders to make more informed and rational trading decisions based on facts and data rather than emotions or personal biases.
What does Jared suggest traders do to overcome subjective biases?
-Jared suggests traders track their trades, use video recording systems like OBS to record themselves trading, and maintain a trading journal. These practices can help traders identify patterns, unconscious biases, and areas for improvement in their trading approach.
What are some common misconceptions traders have about themselves according to the transcript?
-Some common misconceptions traders have about themselves include believing they are more patient, decisive, or capable than they actually are in a trading context. They may also overestimate their ability to handle certain trading scenarios or underestimate the challenges involved.
How does Jared address the issue of setting realistic trading goals?
-Jared addresses the issue of setting realistic trading goals by encouraging traders to be objective about their capabilities, resources, and the time they can commit to trading. He emphasizes the need to align trading goals with personal traits, time constraints, capital, and intangibles like emotional stability and discipline.
What is the significance of understanding personal trading style according to Jared?
-Understanding personal trading style is significant because it allows traders to develop a trading plan and strategy that aligns with their strengths and weaknesses. This alignment can lead to more consistent decision-making, better management of trades, and ultimately, greater success in trading.
Why does Jared stress the importance of tracking and reviewing trading performance?
-Jared stresses the importance of tracking and reviewing trading performance because it provides traders with valuable insights into their trading habits, the effectiveness of their strategies, and areas for improvement. This analysis helps traders make necessary adjustments and refine their approach to better align with their objectives and capabilities.
What are some factors that can influence a trader's success according to the transcript?
-Some factors that can influence a trader's success include their personality traits, time constraints, capital availability, understanding of market dynamics, and their ability to manage emotions and maintain discipline during trading. It's also important for traders to have a clear, realistic trading plan and to continually educate themselves about market trends and strategies.
How does Jared suggest traders handle situations where their trades do not go as planned?
-Jared suggests that traders should be prepared to handle situations where their trades do not go as planned by having a well-defined trading plan that includes risk management strategies. He also encourages traders to learn from these experiences, adjust their plans as needed, and not let emotions like frustration or fear dictate their actions.
What is the role of discipline in trading according to the lecture?
-According to the lecture, discipline plays a crucial role in trading as it helps traders stick to their trading plan, manage risks effectively, and avoid making impulsive decisions. It also enables traders to learn from their mistakes, maintain consistency in their approach, and continuously improve their trading performance.
Outlines
🤔 Introduction to Trader's Self-Identity
The speaker, Jared Wesley, introduces the topic of self-identity in trading. He emphasizes the importance of understanding who you are as a trader, rather than who you think you are. He points out the common misconceptions traders have about themselves and sets the stage for a lecture that aims to provide insights into overcoming subjectivity and embracing objectivity in trading decisions.
🧐 Understanding Biases and Objective Truth
Jared delves into the concept of biases that traders often have, which can hinder their success. He stresses the need to identify and overcome these biases to find an objective truth about one's trading abilities. He uses examples to illustrate how subjective beliefs can lead to incorrect trading decisions and emphasizes the importance of data and experience in revealing the objective truth about one's trading.
🕒 Time Constraints and Trading Styles
The speaker discusses the impact of time constraints on trading styles and strategies. He uses examples to highlight how the amount of time a trader can dedicate to the market can significantly influence their trading approach. He also touches on the importance of aligning one's trading style with their personality traits, time availability, and capital constraints to achieve success in trading.
💰 Capital Management and Risk Tolerance
Jared addresses the aspect of capital management and risk tolerance in trading. He explains how the amount of risk a trader is willing to take and the size of their trading account can dictate the type of trader they can be. He also discusses the importance of starting small and gradually increasing risk as the trader gains experience and confidence.
📈 Adapting to Market Conditions and Personal Growth
The speaker talks about the need for traders to adapt to changing market conditions and to continually grow and evolve in their trading practices. He shares personal experiences and examples from other traders to illustrate how understanding and adjusting to one's personal strengths, weaknesses, and market dynamics can lead to improved trading outcomes. He also emphasizes the importance of patience and persistence in achieving trading success.
🛠️ Crafting a Trading Plan That Fits Your Personality
Jared stresses the importance of crafting a trading plan that fits an individual's personality, time constraints, and financial resources. He explains that most traders fail because they do not consider their personal strengths and weaknesses when designing their trading strategies. He advises traders to be objective about their abilities and to create a plan that aligns with their personal identity and goals.
Mindmap
Keywords
💡Trader
💡Objective Trading
💡Subjectivity
💡Personal Truth
💡Trading Plan
💡Risk Management
💡Accountability
💡Personality Traits
💡Time Constraints
💡Intangibles
Highlights
The lecture emphasizes the importance of objectivity in trading, stating that many traders fail due to subjective biases and not recognizing their true strengths and weaknesses.
Traders often have unrealistic expectations of themselves and their trading abilities, which can lead to disappointment and failure.
Jared Wesley introduces the concept of 'objective personal truth' in trading, urging traders to identify their real capabilities and limitations.
The lecture addresses common misconceptions about trading, such as the belief that patience in other areas of life translates to patience in trading.
Wesley stresses the need for traders to track their trades and review their performance to uncover unconscious biases and improve their strategies.
The importance of understanding one's personality traits and how they affect trading decisions is discussed, highlighting that different traits may be better suited to different trading styles.
Time constraints, capital limitations, and other personal factors should be considered when developing a trading plan that fits an individual's lifestyle and goals.
Wesley debunks the myth that certain trading patterns or strategies are universally successful, explaining that their effectiveness depends on the individual trader's approach and circumstances.
The lecture encourages traders to be realistic about their potential for success and to set achievable goals based on their personal trading history and capabilities.
Wesley shares personal anecdotes and experiences to illustrate the points discussed, making the content more relatable and easier to understand for traders.
The concept of 'climactic' trades is introduced, explaining that these high-risk, high-reward scenarios may not be suitable for all traders, especially those with less risk tolerance.
The lecture touches on the psychological aspects of trading, such as handling losses and the stress of waiting for trades to reach their targets.
Wesley emphasizes the importance of having a well-defined trading plan and sticking to it consistently, even when facing challenges or setbacks.
The lecture concludes with a call to action for traders to introspect and objectively evaluate their trading practices, ensuring they are on the path to improvement and success.
Transcripts
hey guys Jared Wesley here of live
Traders and it is that time of the week
it's lecture time and this week's topic
guys is who are
you as a Trader you guys all think
you're something you're not for the most
part and you're like yeah I think you've
done a lecture on this topic I've done a
lecture on a similar topic but today
I've completely changed it up there's
only maybe one or two slides that are
the same out of the 20 slides we're
going to go through so it's pretty much
a brand new lecture I encourage you guys
um to watch it because I think it's
going to be a very eye openening
experience for you guys you have people
out there saying oh I want to make 200
Grand a year as a Trader but you have a
$2,000 account oh Jared I want to hit
these big three targets but you're the
most jittery impatient person in the
world oh Jared I have a job to go to you
know in one hour but I want to manage on
15minute pivots well that's not going to
work so we're going to talk about all of
those topics today U we're going to look
at some charts as well um but basically
this lecture about how to make you a
better Trader by showing you how to be a
more objective person we need to rid
ourselves of the subjectivity and bring
in the objectivity it's going to take a
little bit of experience a little bit of
practice but it's worth it it's well
worth it all right great lecture if you
like these lectures click that like
button smash Hammer that subscribe
button I'm Jared Wesley of live
Traders let's get to
[Music]
it
this week's lecture topic is who are
you as a Trader a lot of people think
they are something they are not um and
that's just a general I guess uh
subjectivity we all have but at the same
time who you are outside in the outside
world uh is not necessarily who you are
as a Trader you guys hear me say it all
the time it's not a new analogy but just
cuz you can wait 2 hours for a ride in
Disney World doesn't make you a patient
person as a Trader it might make you a
patient person because you can wait 45
minutes for that silly St cup of
Starbucks um but as a Trader could be
completely and totally and utterly
different so we're going to talk a
little bit about that today um who you
are what's required to be successful um
and really going to ask you some
questions about whether or not you are
this or you are that what you think you
are versus what you really are and the
only way to know that obviously is to go
out into the arena you can think you're
something but till you're actually in
the arena you know what I mean like the
Mike Tyson statement everyone's got a
plan till they get punched in the mouth
well that's what trading is when the
market punches you in the mouth for the
first time you're going to realize oo
maybe just maybe I'm not the person I
thought I was uh does this mean that
your hopes and dreams are crashed and
diminished and crushed and you can never
be a great Trader not at all it doesn't
mean that at all and that's one of the
things we're going to talk about today
just because you are wrong about who you
are doesn't doesn't mean that that's the
end of your trading career um so let's
dig on in and
um and talk about this
topic why most people fail trading is
about the search for truth okay
objective personal truth rid yourself of
subjective bias find objective truth you
see the last two parts of that are the
problem right subjective bias is a very
difficult thing to overcome because
sometimes and I hate using this word
because it's a popular catch word it's
unconscious bias sometimes it's just
unconscious bias you don't even realize
you have it but in trading you will
learn you have it if you track your
trades because your tracking Spreadsheet
will show you what you're actually doing
and this is where I also tell Traders
All the Time video record yourself take
OBS open broadcast system it's free
download it and record yourself go buy a
cheap microphone a little Logitech
camera and record yourself then there is
no subjectivity it's the objective truth
the person on the other side of that
camera is you okay and you are saying
and doing those things but trading is
really about the search for truth search
for personal truth objective personal
truth and that's the problem the
objective part most people just aren't
objective okay so today we're going to
talk a little bit about some of the
biases that you guys may or may may not
have and some of the things that you
think about your own trading like here's
here's a good one for example and I know
I harp on them all the time but I feel
like I can do this um someone once said
in the chat room oh it's an odd number
so that's the high of the day if it's an
even number it can't be the higher the
low of the day that's not an objective
truth you need to tell me over the next
3,000 trades every day at least for at
least a 6 month or 12 month period every
day check the high and low of the day
for all 6,000 or 3,000 of those traits
every day and then you can come back
after you have a 100,000 examples
literally and then you can tell me it's
an objective truth otherwise it's just
subjective Tuesdays are bad well that's
subjective unless you have the data over
years not months cuz there's not that
many Tuesdays in three months you need
to tell me that that's an objective
truth do you see where I'm going with
all this guys biases that you don't
think you have you have right you look
at the market a certain way and the
Market's just not that way because oh
you had two losing trades beforehand so
now you're a little bit subjective on a
trade that's crap but you think it's
good because you lost on the first two
trades So today we're going to talk a
lot about that and here's kind of the
first one right what do Traders really
do what do we really do do we sit in our
pajamas well some people might do we
gamble like Casino you know people at a
casino are we like Gordon
gecko none of these things are what
serious Traders do none serious Traders
don't trade from their
pajamas serious Traders don't gamble
serious Traders at least as Traders
aren't stealing information right we
don't we aren't any of these things all
right if you're being objective about
now the world may see us this way and
sometimes you might see yourself as
Gordon gecko but you're nothing like
what he's doing
right some of you probably look like
this on the right hand side right some
of you probably are gambling and I
guarantee a 100% chance some of you
listening are still in your pajamas and
you might even still be in
bed but you're not serious if you're
doing any one of those three things
okay you're not serious if you're doing
any one of those three things so you
guys have seen this slide all right
you've seen this slide from professional
trading strategies
what type of Trader do you want to be
it's a great question but when you
answer the question you have to
understand what it takes to be that
Trader does that make sense like there's
a lot of different types of Traders out
there right there's a lot of different
ways to make money in this business but
if you want to be a certain type of
Trader there's considerations that need
to be made personality traits time
constraints Capital constraints
intangibles we're all a little bit
different intangibles are something you
might be good at and someone else might
not be someone might be a very patient
person they might be a very jittery
person they might be a very angry person
they might be a very positive person
they might be a calm easygoing person
they might be you know
ADHD okay might have the attention span
of a net I don't know but you do and
this is where the objectivity is
Paramount because if you're lying to
yourself you're going to lie to yourself
about who you are and that's going to
change what type of Trader you can be
right so some people will come in and
say well I want to be a Trader that
trades two hours a day and manages on
15minute
pivots well what might be possibly be an
issue with that I want to trade two
hours a day that's the time constraint
okay I want to manage on 15minute
pivots what what might be an issue with
that guys talk to me what might be an
issue in that scenario and we haven't
even gone deep yet this is just surface
what might be an
issue talk to
me I want to trade two hours a day and I
want to manage on 15minute pivots
exactly Ryan 2 hours is not probably
enough for 15minute bars right Jacob
side of rice Rouge that could be very
difficult sure for some trades that's
going to work but for a good number a
large portion call it 50% of your
trades 2 hours isn't enough I mean let's
let's talk realistic here let's say you
want to take buy setups well you're
probably looking at at least five or six
bars correct three bars up two or three
bars back five or six bars 15 minutes
you're already at an hour and a half
before you've even entered the
trade you're already an hour and a half
before you've ever entered the trade
hasn't even pivoted yet on your
management and you're already an hour
hour and a half into the day so that
just doesn't jive with what you want to
be with the type of Trader you want to
be it may jive with your personality
15minute pivots it may meet your Capital
restraints and intendance but it doesn't
meet your time constraints if you have
to somewhere else to be or you have to
go after 2 hours then you simply cannot
use that type of approach okay let's go
back to the drawing board be objective
again and figure out what we need to do
to sort out that 2hour time constraint
that I have and then I can work
backwards from there all right maybe
five minute charts maybe All or Nothing
why why All or Nothing well maybe I can
still use 15-minute charts but instead
of pivots I can use all or nothing cuz I
can set a bracket order and leave
literally set it to sell at the end of
the day today okay now I've overcome one
of the issues right so you need to think
about these considerations when you're a
Trader let's be honest guys come on
let's just talk like
adults did any of you actually do this
when you started
trading I'm raising my hand right now I
didn't I didn't did you think I looked
at oh wow this type of management with
this uh time frame wouldn't really meet
the constraints I have before I have to
go back to work and oh yeah I'm super
jittery but 15-minute pivots they'll
work I didn't do any of this crap none
of it so this is why I'm you know so
strong about it with you guys so that
you can at least shed some light on
things that maybe are holding you back
from being more successful and I'm not
just talking about management I'm
talking about your whole
approach to trading right Capital
restraints example I want to average uh
hypothetical I want to average seven
trades a day
okay well you might think for
example seven trades a day on $5 risk no
problem money is not a problem but what
happens when you get to a $100 risk or
$200 risk or300 or whatever the number
is and you want to average seven trades
a day you might have a problem you might
have a buying power problem especially
if those seven trades are large
management trades where you're looking
for three or four our targets if you're
trying to get in and out in and out scal
scal scal scal maybe it's okay but if
you're trying to get two or three R and
you're in the trade for 30 minutes or an
hour and you which means you're going to
be in three or four or five positions at
one time that could be a problem with
capital
constraints it's an issue another
Capital constraint yep I figured it all
out to replace my salary I need 150
Grand a year okay well you're a account
might not be big enough to realistically
do that maybe you have a $330,000
account that means you need to make
500% per year that's not terribly
realistic I mean if you're risking 2 or
3% that might be realistic but not at
half a per or
1% so you might be that person that has
two problems okay the two problems you
might have are I want to take seven
trades a day and I want to make
500% well both of those are a problem
you probably don't have enough money in
your account to take the seven trades a
day you need and you probably don't have
enough money in your account to risk the
amount of money you need to risk to make
500% now you have two
problems so all of these things factor
in to whether or not you're going to
likely be a successful Trader but most
people don't even spend 5 Seconds
thinking through this and then the
personality trait one is is usually the
hardest one to overcome look time's easy
like that's just the math equation I
have a job at 11:00 I need to leave the
house by 10:30 great that's easy you
have an hour to trade okay it's pretty
cut and dry Capital oh I got a 50k
account this is how much I pretty cut
and dry personality and intangibles are
a little bit more
subjective they need to become objective
maybe for
example you want to take those seven
trades a day and you want to do it on a
one minute chart but maybe you're
terrible with order entry
maybe you're terrible with math what do
I mean by that you don't have enough
time to figure out the stop the entry
and the target quick enough to catch
those one minute trades that's an
intangible that doesn't jive with what
you're trying to become so you might
want to move up to five minute charts to
give yourself a little bit more time to
develop the order entry or 15minute
charts do you see where all these
factors come into play people just throw
at the wall and hope it sticks now
they wonder why they're not doing well
because they're not actually working
towards being the trader they can be
they're working towards a Trader they
think they can be but it doesn't jive
with their personality or their time or
their capital or their
intangibles okay it's a very big deal
and you need to really give it some
serious thought when you're trading okay
let's move on a little bit okay
experienced Traders might use a
percentage of your account but new
Traders use $5 risk this is great and a
lot of you you know this but what
happens when you do progress and you do
move to 50 or100 or $500 will your
account be big enough to sustain that
level of risk with the style you're
currently using because one of the
things you don't want to have to do is
change your style later on and I say
this you guys know where I'm going with
this sometimes a Trader will say yeah
well it's only $5 risk I'll say to them
well gez that stock is very illiquid it
only does you know 200,000 shares per
day yeah but I'm only trading $5 risk it
doesn't matter well what if you're on $5
risk for 6 months and then you move to
10 then 20 and all of the sudden it's
been two years and you're so used to
trading2 200,000 share stocks but now
you're doing $300 risk you can't trade
those stocks anymore they're too spread
they're too whippy they're too ill
liquid but you've been you've taught
yourself to trade ill liquid stocks for
two years
start how you want to be later on does
that make sense trade liquid stocks from
day one don't trade those crazy spread
stocks get in the habit of doing the
things you're supposed to be doing now
so that later on you don't have to make
any other adjustments it's hard enough
this business you don't want to have to
make these adjustments all the time
right new Traders spend a couple weeks
on paper go to small risk all right work
your way up why do we work our way up I
know it sounds so stupid and obvious we
work work our way up for two reasons one
so you don't lose money unnecessarily
right that's the number one reason I
would tell the same thing to Jeff beos
start small two you're learning so much
about yourself during this process and
guess
what it's cheap the education is cheap
if you risk too much money the education
could be very very very expensive and a
lot of you have found that out the hard
way okay frequency some trades may be
successful but only happen very rarely
right you can overcome smaller risk
levels with higher frequency where am I
going with this this goes back to what
type of Trader do you want to be for
example I'll look at Ali Ali doesn't
take that many trades we've you know
done a good job here after mentorship
he's increased frequency a little bit
but probably not exactly where you want
to be yet so for example if you take one
trade a day 20 trades a month well let's
roll it
back okay Jared I am this is the Trader
I want to be I want to be a Trader who
averages 20 a month I'll give myself one
month of year vacation so I need 220 r a
year okay well how many trades you think
oh one trade a day so you're going to
take 220 trades and you want 220 R you
want basically a 1.0 expectancy you're
basically God yes you're basically the
Wilt Chamberlain of trading you're the
Wayne Gretzky of
trading no to to go into this business
with that level of expectation is absurd
and it's a recipe for failure and then
why that's why the one of those slides a
couple slides ago this is the reason
most Traders fail let's go back real
quick let's go
back trading is about the search for
truth objective personal truth well to
know that you need to be the Wilt
Chamberlain Michael Jordan Wayne Gretzky
of
trading is not a a realistic goal you
might become that but to start off with
that is craziness don't you want to be
able to make some mistakes and still hit
your goal yes the answer is yes cuz we
know we're not perfect but if you want
to make 220 r a year on 20 trades a
month good luck is all I have to say
it's not realistic so you need to figure
something out you either need to say
okay you know what it's not about the r
Jared I need to make
$220,000 a year well now we can work
with that because now we can say all
right well maybe on 20 trades a month we
can get you to a risk level that's
acceptable enough to hit that Target
with a lower
accuracy right a lower batting average a
lower sharp or win loss ratio right so
now maybe maybe just hypotheticals guys
maybe you only need to win maybe seven r
a month maybe you only need seven r a
month well that's okay that's a 33
expectancy well get your risk level to
$3,000 and boom now you're hitting your
$220,000 goal I'm not saying you're
starting there but now you have a
realistic reasonable path to that goal
but now we have to go and wind it back
do you have an account large enough to
risk $3,000 now remember you're not
there yet but someday you want to be
there is your account large enough to do
that no it's not okay well now we have
to go back to the drawing board again
okay how do I make
$220,000 in 2 hours a day managing on
two R All or Nothing with one trade a
day oh well you come and you're
like 1 plus 1 doesn't equal two
anymore so something objectively has to
change you either need more trades or
higher risk but we know you can't do
higher risk cuz you already said you
don't have an account big enough so now
we need a high higher frequency can you
go from 20 trades a month to 30 or 40 do
you see where I'm going with all of this
guys now I consider it to be obvious
because they've been doing this 20 years
but to a new person they're not thinking
about any of this stuff how do you get
from where you are to where you want to
be and is it
reasonable I don't mean
perfect no one's perfect
so accept the fact
allow for the fact that you will make
mistakes can you still hit those goals
go back again to the slide all right I
want $220,000 a year all right do I have
the capital to do it I don't know do I
have the time to do it I don't know do I
have the personality to hold for two or
three I don't know then you got to check
off all those things and you got to kind
of reverse engineer it and go I know
what I want but what I want doesn't
coincide with what I actually am and
what I have I don't have the money for
it I don't have the time for it and I
don't have the personality for it all
right well let's tweak our goal till we
get our goal and our money and our time
and our personality to all match and we
all sing
Kumbaya okay and the other thing next
we're not even talking about experience
yet we're talking about down the road
right down the road not even today okay
so once Traders are beyond the point of
discipline problems larger risk amounts
are less dangerous and then you can
start looking at you can overcome
smaller risk levels with higher
frequency you can reverse that you can
overcome lower frequency with higher
risk levels but that's down the road
okay it's like any business right if
your restaurant only has 10 tables
you're not going to have 25,000 Revenue
that's right unless it's the finest
restaurant in the world and it's a
$1,000 a table right where it's $500
ahead but you're right Oli unless you're
in that fine dining experience nou or
something like that or what is that Jiro
in Japan or whatever you're not getting
there so now you have to rework you have
to rework something you either have to
add more tables to the restaurant or
increase prices on the menu or
both and then or work backwards open a
second location simple math right so
anyway do not make runit decisions
during the trading day this is kind of a
little off topic from what I was talking
about U there's no such thing as a great
play Beyond how great is defined in your
plan no one trade is no better than
another trade it's not okay the idiot
always thinks things are great In the
Heat of the battle okay oh that's a
great idea I need to take it let's take
a step back okay now guys duh
pts there are lots and lots and lots and
lots of different ways to get to the
same goal now patterns have different
expectations is the main point of this
slide this slide isn't about what a
pattern is here's a buy setup here's a
wedge here's a turnaround bar here's a
breakout here's a threeway it's not
about that it's understanding the
expectation guys what's the expectation
on a breakout what type one word answer
what type of pattern is a
breakout what type of pattern is
this thank you
Brian it's a momentum pattern it's a
momentum play okay now why am I asking
this
question
because if you're somebody for example
that has no patience
whatsoever
then a wedge pattern or a buy setup
might not be the best pattern for you
because it's very common for a buy setup
to trigger chop around and eventually
work its way to your target
breakouts good ones don't do that it's
possible that that happens but that's
not the modus operandi of a good
breakout so what's the whole purpose
here well if you're that jittery person
I'd stay away from buy setups I'd stick
with those three bar plays and those
breakouts right because you're the type
of person who personality-wise is
probably not going to do so well on a B
on a big pullback right you go oh my
gosh oh my gosh oh my gosh it's going
against me what am I going to do right
that's your person Al ity so pick a
pattern pick a play that doesn't have
that that frequently doesn't have that
it should be a hit-and run trade get to
that Target
quickly okay so understand the type of
pattern that you're taking climactic we
know that often times they take two
entries are you willing to get back into
a trade after you stopped out if you are
then maybe a climactic is for you
climactic are wild and Whippy are you
okay with that and then hold on we're
not done what if you're okay with that
on $50 risk but $5,000 risk scares you
okay hold on we got to wind it back now
remember we talked about personality
traits time constraints all those types
of things frequency well now you have a
problem now you've been trading
climactic for a long time and you feel
comfortable until a certain list certain
risk level happens now you're like yeah
that pattern scares the bbes out of me
because I know what slippage is like on
a $100 risk imagine what it's like on a
$1,000 risk or $10,000 risk I don't know
if I want to take climactic anymore
because they're so wild and Whippy I was
okay with it at 100 but now oh my gosh I
took one I took a half hour slippage on
it do you want to have to go back and
recreate how you trade after three years
or two
years probably not
so know that if you choose to tra
parabolics and climactic that this is a
wild and Whippy pattern and you know
someday the goal is to get your risk
from $5 to five or 10,000 that's the
goal understand I know I know you could
be objective or subjectively saying yeah
but I'll be ready by then that's what
most people will say but I'll be ready
by then and maybe you will maybe you
won't only time will tell right but
these are things you need to consider
the level of slippage you could take on
parabolics the sheer infrequency of
parabolics they just don't happen that
often so if you choose that pattern you
have to understand that your frequency
is going to be low and it's going to be
wild and Whippy when you do take
them understand the expectation because
every pattern is different and how does
that meld or mold into your personality
and your time and all of those things
okay there's just a lot of things to
consider when you trade and most people
just don't they're like yep going to be
a Trader threw some money into an
account
YOLO I wish I were joking but it's
extremely common okay you do Martin but
let me give you an example you're
correct 100% correct you have to
condition yourself to that level but as
we talked about before the lecture
remember right before the lecture we
talked about 10 and $20,000 risk certain
patterns are more challenging it's hard
to get those kind of shares on a
breakout right because when it breaks
over this level they usually rip well
you're going to have to start
anticipating more and more and more and
lower and lower and lower getting into
them because you're not going to get
filled over that number right same with
a parabolic it's much easier on a buy
setup right they don't explode like
parabolics or or breakouts you see what
so while yes you're correct we all need
to condition ourselves to get to that
level there are some patterns that are
more and less conducive to certain
levels of risk and on that note also I'm
gonna use cliff and I think he won't
mind me using him Cliff is a one of the
best Traders you'll ever meet the guy
reels off 200 a year like it's Clockwork
chilling out okay
but he did $500 risk for five or 10
years I don't know a long time why he
wasn't ready for whatever reason
conservative nature with his his money
management approach whatever it was he
just wasn't
ready okay and it took him a long time
to get over it and he finally did now
he's at $1,500 risk and he's killing it
and I look at it and go man should have
been doing that sooner but he looks at
it and says I wasn't ready see he was
objective about it now were there things
he maybe he could have done to push the
Readiness right expand his par maybe
maybe but who am I to tell him he's a
great Trader I can't tell him you're
ready you
know he finally got to that point he
finally got to that point and now is my
goodness best month he's ever had in 15
20 years of trading it just had it last
month I'm not surprised why am I not
surprised because he's the same Trader
he was two months ago 3 months ago so it
should carry over to the higher risk
level it was just just a question of
would he break his plan for me there was
no question there because Cliff doesn't
ever break his plan or almost never
breaks his plan so to me making the more
money was just a byproduct of higher
risk cuz cliff in my mind has always
been capable of it and
now the world is his oyster he you know
Jeff Yates always says once you expand
your mind it can never retain its
original shape Cliff's mind will never
retain its original shape and I bet you
guys
going from 1500 to 2,000 will be quicker
than it was from 500 to 1500 because I
think he's seeing that you know we'll
see time will tell but he's a
machine but he was objective about
saying I'm not ready now here's a few
examples from recent okay there's a
method to my madness here all right
Roku one minute breakdown with relative
weakness made three grand on this trade
okay this wasn't I don't know a month or
two ago something like that nice pattern
right breakdown entry 9065 stop loss 92
but this isn't what this is about sure
you can look at this and go wow the
market turned weak and Roku went lower
and I made money great great great who
gives a who cares the question is
simple selling at half selling half at
half R that's a scalper's approach
that's what I did I sold half of my
position at a half of an R gain okay you
can see it right down here you could see
my order right there 90 04 all right I'm
in this thing roughly a 9065 that's a 60
C gain roughly on a $130 stop $135 stop
so roughly a 60c gain okay 65 Cent gain
whatever that's a half of an
R is that a reasonable approach to
trading I don't know is it and the
answer on every one of these and I'm
going to give it to you early is
it depends it depends
on your personality traits your time
constraints your Capital constraints
your intangibles what are you really
good at for most
people for many people selling half half
of an R is a very difficult approach to
trading why simple because they don't
win often enough to overcome such a
small Target they simply do not win
often enough to overcome such a small
Target okay let's try it again selling
all of it for a half hour gain stupid is
this little farest Gump action here our
half our targets
insane entry
4255 stoploss 4180 nice little ShakeOut
tail in U you can see my order 4255
right there 7,000 shares of this thing
right here okay it's Moving on Up Moving
on Up Moving On Up the order is set in
the system to
sell at 4291 which is a half hour game
right that's what a 36 Cent Target or
something like that on a 72 Cent stop is
that nuts is it
crazy I don't know you guys tell me is
it
crazyy it
depends can can you win enough to offset
when you lose
next can you handle while it may be rare
and
unusual can you handle taking a full
loss knowing that you need two trades to
get back to break even can you handle
that I mean this bats like
80% but on that 10 or 20% where you stop
out
imagine imagine you had backto back
stopouts now you need four winning
trades to get back to break
even can you handle
that made me a lot of money in January I
was doing a half R All or Nothing that's
it half R All or Nothing made me a lot
of money in January I mean I wish I was
doing two hard cuz that made even more
money okay exactly Oli what does the
back back testing say what does your
personality say what does your time
constraint say we're looking at every
factor in here we're putting all of
those things together and we're still
going to back test it and we're going to
try to find wait for it objective truth
that's what we're looking for I don't
want
subjectivity I want to know the actual
truth I don't tell I want to tell me
what you think show me what the numbers
say
Okay
Tesla two minute three bar play pretty
nice pattern $5,000 gain on Tesla r1r
targets
insane you guys see where I'm going with
this I'm slowly moving in a direction
slowly selling for one r one R All or
Nothing is that nutso is that
crazy I don't
know what do the stats say what does
your personality say what does your time
constraint say what does your tring
spreadsheet tell you how do you feel
when you're doing
it I don't know I'm not you I not you
okay right the you know the comment that
somebody's making is it works as long as
your batting average is high enough
that's true but
Antoine can you have a high high enough
batting
average that's the question this a
$64,000 Question can you have a high
enough batting average are you a good
enough stock picker
to make one R
work goes back to
again what's the objective truth what
are the stats telling you okay so
there's a 5k gain there great keep keep
going snow from was this yesterday yes
it was
yesterday is a hybrid approach
insane this was a very nice pattern
173 you know three minute four bar play
I mean is a just a beautiful pattern
okay I don't know why this is stop loss
is so off there I apologize the stop
loss is actually right here so my
apologies there but nonetheless not the
point okay I got a late
fill this stock did eventually work and
this thing went down to like 166 just
kept on going and going and going
okay that hybrid approach in this case
was half at one R half at 2
R half at 1 R sell move to break even on
the stop loss sell the back half a two
R is that insane I don't know what do
the statistics say okay next
next what about this meta 2minute buy
setup gave it extra room I gave this
trade a lot of room due to market
conditions and almost stopped it held
481 by 22 then ended the the day not at
Target but still up 3200 what's the
question I'm going to ask the question
I'm going to ask is this are you
prepared to hold a trade all day I did
are you comfortable waiting three to
four hours for a Target it goes back to
the time constraints do you have a
management that you can literally place
a bracket order set it and walk away
from if not then that management
approach doesn't meet your time
constraints this buy setup literally
lasted all day I exited at 3:45
p.m. do you have that kind of time I set
a bracket and walked away right I did I
set a bracket and walked
away
okay yeah comfortable with it but don't
like it they're two different things as
long as you're not breaking your plan
right Brandon that's all that matters
but some people let's be honest look
come on guys let's talk like adults for
a second you know you've done this
before you set your bracket order and
you go and you leave for work and what
do you
do you pull out this little device
called a an iPhone cell phone and you're
looking at it you're looking at it
you're looking at it oh my gosh well
you're supposed to be at work right now
you're supposed to be doing other things
yes exactly right Sophia exactly they
stress about it they're out there having
lunch with their kids and they're
they're literally instead of enjoying
the moment with their family they're
thinking about the stock and trade that
they're in in you don't want to do that
so you need to understand personality
wise can you handle
that or you might have a rule by I don't
know say 11:00 if it doesn't hit Target
by 11:00 I hit market and walk away
maybe okay now let's take it one last
step further one
more how would you
react okay if your trade hit
Target
but didn't fill you then what's your
reaction printed 300 shares none of
which were mine then what is your
reaction what's your
reaction can you handle that or you
going to
explode you all of these things again to
be fair are things you might not fully
objectively
know
until you've experienced them okay until
they happen to you like I always use the
in the chat room I said nobody cares
until it comes knocking on your door
right well what happens when a stock
goes right to the penny at the penny on
the penny and then boom doesn't fill
you exactly punch the monitor throw the
mouse cry that's okay you're not
destroying it when you got to figure out
how can I mitigate this if you're that
person maybe set a bracket and L truly
walk away and don't watch it don't look
at it
okay yeah mad for a second then
indifference happens I'm mad for more
than a
second but that's 5,000
bucks right I'm mad for more than a
second but you have to cope and
understand maybe my risk is too high or
maybe this approach isn't for
me so the key is this know
thyself having a trading plan that is
conducive to your personal it style is
crucial do not ignore it most Traders
chase money without ever giving thought
to personal here let's let's just put
this in freaking pink let's do this
let's underline it let's italicize it
let's read it out loud together most
Traders chase money without ever giving
thought to personal strengths and
weaknesses it's possibly the single
biggest reason Traders fail lack of a
trading plan that fits them and that's
the key key part not lack of a plan lack
of a plan that fits them okay important
points track all your trades make sure
to have a column that includes actual
results versus trading plan results try
not to adjust your plan too often those
little increments are fine adjustments
are fine one bad month of trading does
not equal a bad trading plan and a lot
of people feel like they do I've seen a
lot of Traders Jared I lost sixr last
month I have a bad plan well one did you
follow the bad plan okay and it may not
be a bad plan right trading plans only
work when they're consistently followed
over long periods of time we're odds
Traders so let the odds play out in your
favor trust the plant and Ali tells you
guys all the time variation is a process
killer variation is a process killer you
keep changing a little or almost
following your plan here and
there it's kind of hard to know what's
really actually happening
okay consideration
realistic time it will take to succeed
is 1 to 3 years plan for it plan for it
okay don't think you're better or more
prepared because of Prior success you're
not you're not some things might present
themselves like Ali for example is very
analytical he's put together some some
really wonderful spreadsheets so that
has helped him but he still had to learn
who he was as a traitor was he an
objective person he knows now for
example that he is very very precise
with his approach to the point
where he doesn't take enough trade
sometimes he's working on that and doing
a great job he's increased his frequency
and it's helped him but my point is is
we still have to go through things
experience things to know things okay we
think something but until we experience
it we won't know how we actually react
to it okay profitability will come
slowly and at a small level in the
beginning right therefore have a
secondary source of income part-time job
all those things to what take the stress
away from needing to make money as a
Trader especially when you're new
eventually you'll become like a robot
and it'll just be automatic but those
first couple few years you don't want
that kind of stress the business is
stressful enough
okay and this is one I don't think
people spend enough time expect to make
mistakes I know people go Jared that's a
that's a negative attitude it is not a
negative attitude expecting to make
mistakes yes it's going to happen I to
my knowledge to my knowledge I don't
believe Tom Brady has ever had a
game where he's had a perfect game and I
don't mean a perfect passer rating I
mean a perfect game where he was 30 for
30 throwing the football I don't think
it's ever
happened what does that mean there's a
few mistakes whether it's a teammate's
mistake or his mistake mistakes were
made they did a lot of great things
things but you you're going to make some
mistakes for me today I had a down day
today but I had 15 of 16 up days 10 days
in a row up I'm going to have a down day
I'm going to make a mistake or take a
trade that doesn't work oh well so I all
be all depressed today no I should be
like hey reversion to the mean that's it
right inconsistent will be normal in the
beginning our goal is to fix that and
become consistent feeling the roller
coaster will be normal in the beginning
tell me I'm wrong you guys have had days
where you had the best weekend ever
because Friday was a great trading day
you had the worst weekend ever because
Friday was a minus three hour down day
and you it literally ruined your whole
weekend you'll get to a point where it
just doesn't
matter by the time you close your
platform down on Friday good day bad day
the weekend's totally separate but when
you're new but when you're
new two bad days Thursday Friday just
Friday could ruin your whole
weekend that's a novice approach
okay understand what's required hard
work dedication persistence continual
education combined with market
experience anything less just won't be
good enough guys strive for p Perfection
Cliff has a great blog post that you
guys want to check out there exactly
Brandon you say don't get that way
anymore but you did and I did when I
started I was like a little freaking
roller coaster okay you guys have seen
this slide before too plan for Success
not failure the more objectively and
accurately you define yourself as an
individual and build your trading style
around it the more successful you'll be
and that's the key build your plann
around who you are objectively not who
you think you are subjectively okay
remember outcome
goals without process goals are just
pipe dreams that I use the same analogy
every time I I do this okay
it's the Lamborghini on the wall with no
job it's the Lamborghini on the
wall with no process to own it she's
like yeah I think I want that someday
well how are you going to make that
happen it's like the retirement
conversation we had yesterday
professional wealth building strategies
you want to retire at 40 or 50 or 60
great how are you going to what is the
process that you will need to go through
to have enough money by that age so that
you can retire
nobody ever thinks about it they just
wake up and go I hope one day I'll have
enough to retire well hope is not a
strategy put it on paper trading is no
different so key points available time
your personality style your financial
resources and your personal preferences
okay and again last
slide trading is about the search for
truth objective personal truth rid
yourself of subjective bias find
objective truth you will have to go
through some subjectivity to get to
objectivity right you believe a certain
way until you're proven it's not that
way so your tracking spreadsheet tells
you no that's just not true now you have
a new reality the question is will you
accept the new reality because if you
don't accept the new reality you can't
change it does this make sense if you're
subjective and then you see something
you're like wait wait that's that's not
what I thought it was but if you're
still in the denial
phase you're not going to be able to
change it and that change is the
progress needed to become a successful
Trader okay we all have to go through
this every one of us none of us are
immune to this every one of us has had a
a a moment in life where we're like well
I didn't know that or I thought
that was true but I was just flat wrong
it's okay there's nothing wrong with it
in fact it's a good thing it shows
progress the fact that you're willing to
say I was wrong is progress and now we
can make meaningful change to help
become a better Trader more successful
more profitable hopefully right so this
is what it's really all about the search
for personal truth and it has to have
some level of OB activity and the way to
get there is to track your
trads video tape yourself trading take
notes go back and rewatch it take notes
on it have other people watch it talk to
an accountability partner get a trading
buddy do all of those things so they can
say hey look I know you thought this was
good but let's review it let's talk
about why you feel that way and how you
got to that decision to take that buy
setup that really wasn't a buy setup how
did you come to that decision let's talk
about it so that next time when you're
in the same position you'll think
differently and then by doing so you'll
be a little bit more
objective so I hope that makes sense to
you guys it's a very deep topic but a
simple one at the same time right
there's a lot of introspection that
takes place but the broad concept is
simple we need to be better at our
process so that our outcome goals will
be greater all right so hope you guys
learned enough to become better Traders
I hope this lecture will help you guys
be more profitable I'm Jared Wesley of
live Traders we'll get back at it again
next
[Music]
week
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