5 things i stopped doing to become a profitable trader

Summary

The speaker, a seasoned trader, shares the top five mistakes to avoid for profitable trading: lacking a clear plan, overtrading, emotional impulsiveness, poor risk management, and failing to adapt to market conditions. Emphasizing the importance of preparation, execution, evaluation, and improvement, they stress the need for a robust trading plan, self-discipline, emotional awareness, and strategic flexibility to achieve long-term success in trading.

Takeaways

• 📈 The importance of having a clear trading plan is emphasized, as it's the foundation for consistent profitability and managing emotions during trades.
• 📋 Journaling every trade is crucial for defining entry, exit points, and risk management, which leads to a more structured and less stressful trading experience.
• 🔍 A robust trading plan involves preparation, execution, evaluation, and improvement, with an emphasis on personal psychology and self-awareness.
• 🚫 Overtrading and lack of discipline are highlighted as significant pitfalls, suggesting that fewer, well-planned trades are more effective than frequent, impulsive ones.
• 🧘‍♂️ Self-mastery is intertwined with trading mastery, indicating that personal development and emotional intelligence are as important as technical skills.
• 💡 Emotional trading is not inherently bad; it's about understanding and leveraging emotions as additional data points to inform trading decisions.
• 🛡 Risk management is the core of trading, not making money. Effective trading is about managing risk through proper use of stop losses and take profits.
• 🔄 Adaptability is key in trading due to the ever-changing market conditions, requiring traders to be flexible and intuitive in their approach.
• 📊 Price action is favored for its flexibility and adaptability across different market conditions, allowing for consistent trading strategies.
• 🌟 The script concludes by stressing that trading success is achievable with hard work in preparation, clear planning, and the ability to adapt to market changes.

Q & A

What are the five biggest mistakes to avoid in trading according to the speaker?

The speaker does not explicitly list five mistakes but emphasizes the importance of having a clear plan, avoiding overtrading and lack of discipline, managing emotions, focusing on risk management, and adapting to market conditions.

Why is having a clear plan crucial for successful trading?

A clear plan is crucial because it provides consistency and reduces the uncertainty in trading. It helps in managing emotions and executing trades without overthinking, leading to stress-free trading.

How does journaling every trade contribute to improving trading?

Journaling helps in tracking and evaluating trades, understanding market conditions, and identifying patterns and mistakes. It provides a basis for refining the trading plan and improving execution.

What is the significance of preparation in developing a robust trading plan?

Preparation is significant as it involves the hard work of testing and personalizing the trading strategy. It ensures that the trading plan is tailored to the individual's psychology and can be executed effectively.

Why should traders focus on quality over quantity when it comes to the number of trades?

Focusing on quality over quantity conserves emotional capital and reduces the likelihood of making mistakes due to overtrading. It emphasizes the importance of taking calculated and well-planned trades rather than random ones.

How does the speaker define emotional trading and impulsive trading?

Emotional trading and impulsive trading refer to making decisions based on feelings rather than a defined plan. The speaker suggests being aware of emotions and using them as additional data points to inform trading decisions.

What role does risk management play in the speaker's trading philosophy?

Risk management is central to the speaker's trading philosophy. They emphasize that trading is more about managing risk than making money, and proper risk management is key to achieving long-term profitability.

Why is it important for traders to adapt to changing market conditions?

Adapting to changing market conditions is important because market dynamics are always evolving. A flexible approach allows traders to adjust their strategies based on current market behavior, leading to more effective trading.

What does the speaker suggest as a method to improve self-discipline in trading?

The speaker suggests self-improvement activities such as meditation, reading, journaling, metacognition, and working on beliefs and self-image to improve self-discipline and consistency in trading.

How does the speaker view the role of technical analysis in trading?

The speaker views technical analysis as a tool for managing risk rather than making money. It helps in defining market structure and setting stop losses and take profits to manage risk effectively.

Outlines

00:00

📈 The Importance of a Clear Trading Plan

The speaker emphasizes the critical role of a well-defined trading plan in achieving profitability in trading. They share their experience of teaching 100 people to trade and highlight the most common mistake among traders: lacking a clear plan. The speaker stresses the need for a written plan with defined entry, exit, and risk management strategies. They advocate for journaling every trade to refine one's approach and ensure consistency, which is key to long-term profitability. The speaker's own trading plan is detailed, including risk management, stop-loss, and take-profit strategies, illustrating the importance of preparation and simplicity in a trading plan.

05:02

🚫 Overtrading and the Need for Discipline

The paragraph discusses the pitfalls of overtrading and the importance of discipline in trading. The speaker identifies overtrading and lack of discipline as significant barriers to profitability, often stemming from unclear trading plans or psychological factors. They argue that trading should be approached like a sniper rather than a machine gun, focusing on quality over quantity. The speaker suggests that emotional capital is finite, and overtrading depletes it, leading to mistakes. They share their own strategy of taking only one to two trades per day to conserve emotional capital and maintain discipline. The paragraph concludes with the idea that mastering trading is intertwined with self-mastery, suggesting that self-improvement techniques like meditation and journaling are crucial for trading success.

10:02

🧘‍♂️ Emotional Trading and Its Impact on Decision Making

This section delves into the role of emotions in trading, challenging the notion that emotions should be suppressed. The speaker argues for a deeper awareness and understanding of one's emotions, suggesting that they can be used as additional data points in trading decisions. They differentiate between harmful emotions like hope in a losing trade and beneficial ones like fear, which can signal the need to manage a trade. The speaker shares their personal journey from trying to control emotions to fully embracing and utilizing them, which they believe significantly improved their trading. They also touch on the concept of market biofeedback, where one's intuition and emotional responses can provide valuable insights into market conditions.

💡 Risk Management: The Core of Successful Trading

The speaker underscores the importance of risk management as the central aspect of successful trading. They clarify that the primary goal of technical analysis and trading strategies is not to make money directly but to manage risk effectively. The speaker discusses the importance of setting realistic stop-loss and take-profit levels based on market structure and personal risk tolerance. They also mention the psychological aspect of trading, explaining that detaching from the outcome and focusing on risk management leads to profitability. The speaker encourages traders to view trading as a risk management exercise rather than a pursuit of profit, which they believe is a key mindset shift for long-term success.

🔄 Adapting to Market Conditions for Consistent Trading

The final paragraph addresses the need for traders to adapt to the ever-changing market conditions. The speaker points out that while consistency in trading is important, it must be balanced with the ability to adjust strategies based on current market dynamics. They discuss the importance of understanding different time frames and market volatility to make informed trading decisions. The speaker shares their experience with price action trading, which they find flexible and adaptable to various market conditions. They conclude by stressing the importance of having a strategy that can be replicated daily while still allowing for discretion and intuition to adapt to changing conditions, which is essential for long-term profitability.

Keywords

💡Trading Plan

A trading plan is a comprehensive strategy that outlines the rules, risk management, and entry and exit points for trades. In the video, the speaker emphasizes the importance of having a clear and well-defined trading plan to achieve consistency and profitability in trading. The plan should include personal strategies that are simple and easy to execute, as well as a method for tracking and evaluating trades.

💡Clarity

Clarity in trading refers to having a clear understanding of one's trading strategy and objectives. The video highlights that without clarity, traders may fall into the trap of taking random trades without a defined plan, leading to inconsistency and potential losses. Clarity helps in reducing emotional issues during trade execution.

💡Journaling

Journaling in the context of trading means documenting every trade taken, including the reasons for entering and exiting trades, and any adjustments made. The video script mentions that journaling is non-negotiable for successful trading as it provides a record for review and improvement, helping traders to refine their strategies and maintain consistency.

💡Risk Management

Risk management is the process of identifying, evaluating, and prioritizing risks to minimize or eliminate potential losses. In the video, the speaker stresses that trading is primarily about managing risk rather than making money. This includes setting stop losses and take profits to protect against significant losses and to secure profits, respectively.

💡Overtrading

Overtrading refers to the act of making too many trades in a short period, often driven by impulsivity or a lack of discipline. The video script warns against overtrading, as it can lead to emotional exhaustion and a degradation of decision-making quality. The speaker suggests focusing on quality over quantity to conserve emotional capital.

💡Discipline

Discipline in trading is the ability to adhere to a trading plan and resist the urge to deviate from it due to emotions or external influences. The video emphasizes that discipline is crucial for long-term profitability, as it helps traders to maintain consistency and avoid impulsive decisions that can lead to losses.

💡Emotional Trading

Emotional trading is when decisions are made based on feelings rather than logical analysis. The video discusses the importance of being aware of one's emotions during trading and using them as additional data points to inform decisions. It contrasts with impulsive trading, where emotions lead to hasty and often detrimental actions.

💡Intuition

Intuition in trading is the subconscious understanding or the 'gut feeling' that can guide decisions. The video suggests that instead of suppressing emotions, traders should embrace them and use them to enhance their intuition, which can be a powerful tool for making profitable trades when combined with market data.

💡Adapting to Market Conditions

Adapting to market conditions involves adjusting one's trading strategy based on the current market environment, such as volatility, news, and economic indicators. The video script points out that while having a consistent trading approach is important, traders must also be able to adapt to changing conditions to maintain profitability over time.

💡Technical Analysis

Technical analysis is the study of historical market data, primarily price and volume, to predict future market movements. In the video, the speaker clarifies that the primary purpose of technical analysis is not to make money directly but to manage risk by defining market structure and setting appropriate stop losses and take profits.

💡Self-Mastery

Self-mastery in the context of trading refers to the ability to control one's emotions, behaviors, and reactions to the market. The video script highlights that mastering trading is intertwined with mastering oneself, as many trading failures stem from human behavior rather than a lack of knowledge or technical skills.

Highlights

The importance of having a clear trading plan to avoid common mistakes and achieve profitability.

The necessity of journaling every trade to develop a consistent and clear plan.

How to define entry, exit, and risk management within a trading plan.

The significance of preparation and having a simple, executable trading plan.

The role of evaluation through journaling to track and improve trading performance.

The psychological aspect of trading and how to manage emotions during trades.

The concept of overtrading and the importance of discipline in sticking to a trading plan.

The emotional toll of financial loss and its impact on trading decisions.

The advice on taking only one to two trades per day to conserve emotional capital.

The relationship between self-mastery and trading mastery, emphasizing personal growth.

The role of emotions in trading and how to use them as additional data points.

The importance of risk management over making money in trading.

The need to detach from the outcome and focus on managing risk for profitability.

Adapting to market conditions as a key to long-term trading success.

The flexibility of price action as a trading strategy that can adapt to various market conditions.

The importance of being able to trade consistently every day with a simple and replicable strategy.

Transcripts

after 4 years of trading I've pretty

much made every mistake that you can

make I'm going to give you the five

biggest mistakes that you have to avoid

if you ever want to be profitable and

I'm going to tell you exactly what you

need to do to become profitable I've

catched around 100 people how to trade

and this is the number one biggest

mistake that people make they don't have

a clear plan don't know what they're

doing how you supposed to be

consistently profitable if you're unable

to be consistent you're just taking

random trades here and there you're not

sticking to a clear plan that you know

works every other mistake on this list

stems from not having Clarity Clarity is

the biggest thing trading is already an

uncertain game if you're uncertain about

your plan you're just doubling up the

emotional issues that you're going to

get when you try to execute on a trade

so how you supposed to get around this

journal every trade you take have a

clear plan that you've written down and

have really well defined entry exit how

you manage trades what are you exactly

looking for to enter trade to exit maybe

it's to add to the position or reduce

your risk this is non-negotiable all the

hardworking trading should be in the

preparation the actual acts of trading

should be effortless my best trades I

don't have to think about them I know

exactly when to take action because it's

clearly defined in my plan I'll give you

an example right now so this is my exact

trading plan that I've written out I

have what I'm trading when I'm trading

what my risk management looks like stop

loss take profit I've defined every

single little piece of my system and I

can just rely on this I don't have to

overthink or Force an outcome I have to

worry I know because I've journaled

every trade I've taken and I have a

clear simple consistent plan that if I

just follow a couple simple things trust

my intuition trust my process I know

certain over the long term that I'm

going to be profitable if we just stick

to this SO trading becomes stressfree

the elements of creating a robust

trading plan is first preparation so

that's where all the hard work comes in

that can be testing um how do you want

to trade you need to plan to be personal

to you no strategy works over the long

term but you can make any strategy work

with enough practice intuition

refinement that's what matters second is

the execution you want your plan to be

something you can easily execute every

day don't plan for your higher self plan

for your lower self make it as simple

and easy to execute as possible and then

the third step is evaluation this is

more where a journal comes in a plan is

to track what you're doing uh when

you're doing it on what instruments so

it's just so you know what you need to

do a journal is how you're executing on

that plan how that plan's going through

different market conditions cuz market

conditions are always changing something

you really need to be aware of and then

the final step step is improving if you

want to improve at trading how are you

supposed to improve if you're not

journaling your trades you need

something to review you have to be able

to review your mistakes in order to

improve so we learn what works by doing

what doesn't so if you just do those

four things you have a clear Edge you

have Clarity around that and it's

personal to your unique psychology all

different that's really robust trading

appro I followed this I went from a

losing Trader um who's been losing for 2

years now I've been profitable for 2

years you're 3 to 6 months away you're

about 20 trades away from being a

profitable Trader you're actually really

close than you think you just have to do

the hard work in the preparation and

then trading will become effortless for

the next biggest mistake this is

overtrading and a lack of discipline

overtrading lack of discipline this can

s from a lot of different things it come

from your beliefs more psychology or it

can come from a lack of clarity you

don't actually know your defined setups

you're taking random trades when you

think you're actually following a plan

but you're not so executing too many

trades being a machine gun rather than a

sniper um it might feel like a good

thing that you're doing a lot but less

is more especially in trading you want

to focus on the 20% of your inputs that

lead to your 80% of your outputs PR

principle the less you trade the more

emotional Capital you're saving SO

trading decisions are emotional

decisions because you're risking money

we feel the pain of a fin Financial loss

250% more than the satisfaction Euphoria

pleasure of a win so the more you trade

the more you're degrading that emotional

Capital um willpower is finite so the

more you trade the more likely you are

to make mistakes I only take one to two

trades per day I can take more there's

more opportunities for that but you just

want to focus on the quality you're not

trading the markets you're trading your

plan and you're and you're flawed you're

human um don't think of yourself as a

robot don't treat yourself as a robot um

this goes back to having a clear plan

you want it to be as simple easy to

replicate as possible and lack of

discipline if you can't stick to a plan

where it says take one to two trades per

day how are you supposed to be

profitable there's a reason 90% of

people fail and if you keep on breaking

that well frankly you just don't want to

be profitable you don't want to as bad

as you think trading is all about

fighting your human nature it's about

training is all about fighting your

human nature people don't fail in this

because of a lack of knowledge lack of

intelligence all the information is out

there on the internet there's no secrets

anymore they fail because of their human

behavior because they don't have

discipline they're not able to stick to

something consistently it's the hardest

part that's the thing I struggle with

the most um and for this if you want to

master trading you first have to master

yourself this is why trading Mastery and

self-mastery are really intertwined um

so if you want to prove in trading you

need some self-improvement meditation

reading journaling metacognition working

on your beliefs your self-image your

awareness these kind of meta skills

learning how to learn I guarantee you

that will give you the biggest Roi than

focusing on learning a new indicator

approach a strategy technicals you fail

because of your behavior not because

your Technique so another big mistake is

emotional trading and impulsive trading

now I'm not going to say emotions are

bad or that you should be robotic in

fact you should feel your emotions more

in fact you should actually focus on

your emotions more when you trade what

are you feeling in certain situations

before you entering trade are you

feeling a bit anxious if you miss a

trade how are you feeling in that exact

scenario you need to be more aware of

your emotions when you're trade not

trying to control them you don't want to

control your emotions you want to use

them you want to feel them as deeply as

possible a lot of people think I'm

emotionless robotic when I trade but I'm

actually focusing on feeling my emotions

as deeply as possible this is because as

manual traders that we are um as

discretionary traders that we are

intuition is what makes you profitable

intuition is kind of the gut feeling so

what makes you profitable is your

emotions um so focusing on that emotion

how you can use that in certain

situations when I was unprofitable I

tried to shut down my emotions not use

them not focus on them um control them

fight against them but that just becomes

that just leads you to be more reactive

to them and impulsive when I felt them

fully accepted them for what they are

and then looked at how they related to

actual Market data it became inol for me

to improve my trading not something that

was detrimental and made it harder so

think of your emotions as another data

point if you're feeling fear that could

be because so look at your emotions as

another data point this is kind of

called Market bio feedback so your

intuition is a feeling Fe can be a good

data point if you're up on a winning

trade and you're starting to feel fear

that's not a bad thing look at it so are

we at a structure that we're rejecting

from is volume kind of decreasing and

the move is feeling like it's kind of

over use that emotion with reality so

you have to look at it in reality as an

indication of for you to manage your

trade it could be for to enter exit a

great thing I do when I'm starting to

feel hope in a loss I cut it immediately

hope is such a bad emotion when you're

losing and it's going to lead you to um

increase your losses a lot more so you

really focus and you really want to

focus on your emotions and feel them as

deeply as possible so for another okay

so this mistake took me the biggest

amount of time to get around it's just

risk management it's simple it's boring

no one really likes to talk about it

it's focus on something else but this is

the most important thing um this is what

you spending most of your time doing

once you've got your Technique and your

strategy down um once you've got decent

risk management so once you've got

decent psychological control in that

you're going to be focused most of your

time on just managing risk um the the

strategy will take care of itself uh so

this is where most people mess up uh

this is trading isn't about making money

it's about managing risk so people not

people so people don't really understand

technical analysis you actually anzing

charts you're not drawing zones you're

not entering you're not placing a stop

loss you take profit this isn't about

making money all this technical analysis

isn't about making money what it is

about is managing risk defining Market

structure um your technical approach

isn't very good for making money um it's

actually quite difficult this is all

about managing risk so setting a stop

loss at an era where you think your

trade will be invalid or setting you

take profit where you think price is

going to react to or reverse reverse

from the whole point of technical analis

is just to manage risk that's why you

have a stop loss and a take profit and I

used to be in the mindset that I'm doing

all of this to make money you're not

doing all this to make money you're

doing this just to manage risk not

trying to control the outcome you're

letting go surrendering to the markets

detaching yourself from the outcome and

that is when you become profitable that

is when you have that is when you'll

cease to have any emotional problems but

you find demo trading so

easy this is why you find demo trading

so easy you trade really well on demo as

as soon as the money's real you start to

make mistakes it gets a lot harder

that's just due to you being attached to

the outcome as soon as you detach that

surrender focus on managing risk instead

of making money you will become

profitable I guarantee you that and the

last mistake is just failure to adapt to

markting conditions trading is difficult

because conditions are always changing

there's always new information coming

out there's always different fundamental

fact is affecting news volatility

volume's also different so so you want

to trade consistently yes but this is

where you can't have a purely mechanical

approach there needs to be discretion

intuition where you can adapt to

different conditions and volatility as

soon as I focused on how volume was

affecting my my trading improved

massively so looking at how how big the

candle bars are what price has been

doing over the past week past month

maybe the past 4 hours the past day I'm

constantly adapting to different market

conditions with updating knowledge be

aware where you are in monthly Cycles

daily Cycles hourly Cycles price is

fractal what happens on the higher time

frames happens on the lower time frames

you really want to build that awareness

build that intuition about adapting to

different conditions this is why no

strategy really works over the long term

but you can make anything work because

you can adapt it to different conditions

no strategy will work in every single

condition my pullback Approach works

when there's enough volume to have a

Breaky structure but not too much where

you don't have a pullback after that

breaker structure so this is where

you're always going to be trading

differently based on different

conditions this is the one minute chart

here you have more Trend more high

volume range bit of a range here

consolidation to then have that push if

we just go onto the daily this can be

seen even clearer even clearer um so you

have more of a shift here you have

extreme bullish Direction extreme

bullish Direction this is when we're

breaking alltime highs the month the

month before that um we were extremely

range bound low volume we weren't really

getting very good moves so when I was

trading this um my rist to was a lot

less so when I'm taking buys with

overall High time frame Direction my

wrist reward can be a lot higher I can

Target a lot further when it's more

range bound my wrist reward be a lot

less my stop loss might be a bit lower

my take profit might be a bit smaller

it's all about adapting to different

conditions if you try to do the same

exact thing every single day purely

mechanical um taking a buy off this

moving average when this other indicator

does this there needs to be some

discretion there some ability to adapt

to different conditions otherwise

there's no hope for you you might be

profitable in certain periods of time

you might have profitable streaks could

be a month could be 3 months but over

the long term you're never really going

to get that consistent profitability

that you're after this is why you need

that discretion you need to build that

intuition this is why I like price

action I can trade pretty similar every

single day the propose direction of

Interest shift but it's extremely

flexible based off different time frames

I can enter in rangeb conditions I can

also enter um continuations of larger

time frames I can do counter Trend um I

can enter all different different market

conditions yes if it's really low volume

I won't have a setup or if it's too high

volume there just won't be a pullback

there won't be a setup but uh most of

the time pretty much every day there's a

good setup so um you want to trade in a

way that you can trade every single day

this is why I don't trade news or

anything like that so you want your

strategy to be simple and easy to

replicate every single day uh price

action is likely to continue doing what

it has been doing so keep that in mind

as well