The One Trading Mistake I Keep Making (And How to Stop It)

Summary

In this video, the trader reflects on recent performance, revealing both wins and losses over the last two days. Despite making and losing $15,000, the trader emphasizes focusing on precision and accuracy of entry points rather than profit and loss. They discuss their struggle with anticipation in trading, entering positions too early, and experiencing emotional stress. The trader highlights the importance of patience and waiting for confirmation before executing trades. They share insights on their strategy, the importance of analyzing price action, and the lessons learned from the day's challenges, offering valuable education for fellow traders.

Takeaways

• 😀 The trader emphasizes that they don't judge their performance solely based on profits and losses (P&L), but rather on the precision and accuracy of their entry points and ability to read price action.
• 😀 The trader admits to having faced challenges with entry precision and patience, which caused stress and poor decision-making during recent trading days.
• 😀 A key mistake the trader made was entering positions too early due to overconfidence in anticipating the market's movements, which resulted in sitting through drawdowns.
• 😀 The trader highlights the importance of waiting for confirmation before entering a trade, such as waiting for a break in downtrends and a reclaim of key levels like VWAP (Volume Weighted Average Price).
• 😀 The trader's analysis revealed that while they initially entered a trade based on a key level (486), the actual stronger support level was 484, which led to losses on the initial trade.
• 😀 Despite the challenges faced earlier in the day, the trader eventually managed to make back their losses and more by waiting for confirmation on a new trade setup.
• 😀 The trader acknowledges the difficulty of remaining patient during high volatility and emotional moments, particularly when tempted to act based on anticipation rather than waiting for price action to align with their plan.
• 😀 The trader reflects on how their early entry into trades based on anticipation, rather than confirmation, caused unnecessary stress and losses but could have been avoided with more patience.
• 😀 The trader emphasizes that trading is about suppressing human emotions like the need to be right, and urges traders to stay disciplined and wait for the market to align with their strategy.
• 😀 In hindsight, the trader recognizes that a simple break and retest strategy would have led to a much less stressful day and better profits if they had waited for price action confirmation instead of rushing into trades.

Q & A

Why does the trader not judge their performance based on P&L?

The trader focuses on the precision and accuracy of their entry points and their ability to read price action. They believe that evaluating trading success based on P&L doesn't provide an accurate measure of their skills and improvements as a trader.

What were the primary mistakes made by the trader in today's trading session?

The trader's main mistakes were entering trades too early due to overconfidence in anticipated market moves, and not waiting for confirmation of key levels and trends before entering trades. This led to unnecessary stress, emotional reactions, and stop-outs.

How does anticipation affect a trader's decision-making?

Anticipating a move can cause a trader to enter the market too early, before any confirmation is present. This can lead to emotional stress and the need to exit the trade prematurely, causing missed opportunities and unnecessary losses.

What is the 'pullback long' strategy that the trader mentions?

The 'pullback long' strategy involves waiting for a price pullback to a previous support or resistance level (in this case, the previous day's high) before entering a long position, anticipating a reversal and continuation of the trend.

What was the key issue with the trader's chosen entry point at the 486 level?

The trader entered the market at 486, believing it was the key level for a pullback long, but the actual strength in the market was at 484. This misalignment between their chosen level and the actual market behavior led to an incorrect entry and an early stop-out.

How did the trader's understanding of the market setup change throughout the day?

The trader initially misjudged the market and entered too early, but after getting stopped out, they observed the price action more carefully and realized that the correct level to trade from was 484. They later re-entered successfully, making back their losses after waiting for confirmation.

What psychological challenges did the trader face during the trading day?

The trader faced emotional stress due to volatile market movements, leading to overconfidence and impulsive decisions. The desire to be right and catch a move before it happens also led to early entries, which increased the emotional tension and resulted in unnecessary losses.

What role does patience play in the trader's success?

Patience allows the trader to wait for confirmation of the market's true direction, preventing premature entries that can lead to losses. By waiting for clear signals, the trader can avoid unnecessary stress and improve the precision of their trades.

What does the trader mean by 'staying patient for confirmation'?

Staying patient for confirmation means waiting for the market to validate a setup before entering a trade. This includes waiting for key levels to hold, trends to break, or for indicators like VWAP to confirm a price movement, rather than entering based on anticipation.

What would have been the trader's ideal approach to the market today?

The ideal approach would have been to wait for the market to show confirmation at key levels, such as waiting for the pullback to the previous day's high, observing the break of the downtrend, and confirming the move with VWAP before entering. This would have minimized stress and led to a better trading outcome.