8 Trading Rules To Become Profitable in 2024...
Summary
TLDRThis video script emphasizes the journey to becoming a successful trader as a marathon, not a sprint. It outlines the necessity of having a well-defined strategy or 'playbook', the importance of backtesting, starting with small trades to build confidence, and maintaining consistency. The speaker also highlights the value of journaling for tracking progress and improving trading capacity. They advise against focusing solely on profit and loss as a measure of success, and stress the significance of risk management, having a pre-market game plan, and ignoring outside noise on social media. The script concludes by urging traders to stay in their lane, be patient, and face the reality that trading is challenging, requiring both a solid strategy and psychological strength.
Takeaways
- đ Becoming a successful trader is a long-term endeavor, not a quick sprint to the finish line.
- đ Develop a well-defined trading strategy or 'Playbook' that includes a clear edge in the market and specific entry and exit rules.
- đ Backtest your trading strategy to refine and validate the rules before going live with real trades.
- đŒ Start trading with small sizes to build confidence and experience without risking too much capital upfront.
- đ Consistency is key; stick to your strategy and avoid changing it frequently based on emotions or daily market fluctuations.
- đ Journaling and tracking your trading data is crucial for identifying patterns, strengths, and areas for improvement.
- đ Focus on improving your trading process rather than solely on profit and loss (P&L) as a measure of success.
- đ« Keep risk management at the forefront of your trading approach to ensure longevity and avoid significant drawdowns.
- đ Have a pre-market game plan and routine to set up each trading session with a clear strategy and mindset.
- đ€ Ignore external noise from social media and other traders; focus on your own trading path and avoid the fear of missing out (FOMO).
- đ§ââïž Trading is mentally challenging; be prepared for the psychological aspect and the need to conquer your own emotions and biases.
Q & A
What is the main theme of the video script?
-The main theme of the video script is that becoming a successful trader is a marathon, not a sprint, and it requires a well-defined strategy, consistent journaling, and risk management.
Why is having a playbook or strategy crucial for trading?
-Having a playbook or strategy is crucial because it provides a well-defined system and edge in the market that allows traders to make money. Without it, becoming profitable is very difficult.
What steps should one take to develop a trading playbook?
-To develop a trading playbook, one should: 1) Identify the market criteria where the strategy will work, 2) Have entry and exit rules, 3) Back test the strategy, 4) Refine the system based on backtesting, and 5) Start trading with small size to build confidence and experience.
Why is journaling and tracking data important in trading?
-Journaling and tracking data are important because they help traders understand their performance, identify what strategies work well, recognize patterns in their trading behavior, and make necessary improvements.
How should traders measure their success if not by their profit and loss (P&L)?
-Traders should measure their success by tracking improvements in their strategies, win ratios, loss ratios, risk management, and overall trading process rather than focusing solely on their P&L.
What is the significance of keeping risk consistent in trading?
-Keeping risk consistent is significant because it helps traders stay alive in the market for a longer period, avoid massive drawdowns, build confidence, and maintain stability in their trading accounts.
What should a pre-market game plan include?
-A pre-market game plan should include a routine and system for assessing market conditions, key levels, upcoming economic events, previous market movements, and getting into the right state of mind before trading.
Why should traders avoid paying attention to social media and other traders' success?
-Traders should avoid paying attention to social media and other traders' success because it can create unrealistic expectations, cause FOMO (fear of missing out), and lead to taking impulsive and ill-informed trades.
What does it mean to 'get out of fantasy land' in trading?
-To 'get out of fantasy land' means to recognize and accept the reality that trading is difficult, requires hard work and consistent effort, and avoid the illusion of quick and easy profits.
How can traders conquer themselves to be successful?
-Traders can conquer themselves by managing their emotions, staying disciplined, adhering to their strategy, and continuously improving their psychological and technical aspects of trading.
Outlines
đ Developing a Successful Trading Strategy
The first paragraph emphasizes the importance of developing a well-defined trading strategy or 'Playbook' for success in trading. It suggests identifying market criteria for the strategy, establishing clear entry and exit rules, and the necessity of backtesting to refine the system. The speaker advises starting with small trades to build confidence and experience, and stresses the importance of consistency in sticking to the strategy. Additionally, the paragraph introduces the concept of journaling to track performance and improve trading over time.
đ The Role of Journaling and Risk Management
The second paragraph discusses the critical role of journaling and data tracking in becoming a profitable trader. It highlights the importance of understanding performance metrics, such as which strategies work best and under what conditions. The speaker shares personal insights on the value of a pre-market game plan and the discipline required to stick to a trading plan, especially in terms of risk management. The paragraph also addresses the common mistake of focusing solely on profit and loss (P&L) as a measure of success, instead advocating for a broader perspective on improvement and consistency in trading practices.
đ« Avoiding Distractions and Staying Focused
The third paragraph warns against the pitfalls of being influenced by other traders on social media and the pressure to mimic their strategies. It advises traders to ignore the noise and focus on their own trading journey, with a clear plan and consistent risk management. The speaker also emphasizes the importance of having a pre-market routine and mindset preparation before trading, as well as setting personal rules to prevent emotional trading decisions. Lastly, the paragraph urges traders to avoid the fantasy of easy success and to be mentally prepared for the challenges of trading, with a focus on self-conquest and strategy development.
Mindmap
Keywords
đĄPlaybook
đĄBacktesting
đĄRisk Management
đĄJournaling
đĄProfitability
đĄP&L (Profit and Loss)
đĄEntry and Exit Rules
đĄConsistency
đĄPre-market Game Plan
đĄSocial Media Influence
đĄPsychology
Highlights
Becoming a successful trader is a marathon, not a sprint, emphasizing the need for patience and a long-term approach.
The importance of having a well-defined trading strategy or 'playbook' for profitability in the market.
Identifying market criteria as a crucial step in developing a trading strategy.
Establishing clear entry and exit rules for a trading strategy to ensure consistency.
The necessity of backtesting a trading strategy to validate and refine the rules.
Starting with small trade sizes to build confidence and experience in the market.
The need for consistency in using a trading strategy to avoid frequent changes and unpredictability.
The value of journaling and tracking data for continuous improvement in trading.
Importance of having a pre-market game plan and recapping every trade for analysis and learning.
Avoiding the focus on P&L as the sole indicator of trading success, and looking at other measures of improvement.
The significance of keeping risk consistent and managing it effectively for long-term trading success.
Creating a pre-market routine and system to prepare for each trading session.
Setting personal trading rules to avoid emotional decisions and maintain discipline.
The negative impact of social media on traders and the importance of ignoring outside noise.
The need to focus on a single or few trading styles and mentors to avoid confusion and develop expertise.
Recognizing the difficulty of trading and the importance of mental preparation for the challenges ahead.
The psychological aspect of trading and the importance of self-conquest in addition to having a solid strategy.
The final advice on staying in one's own lane, being patient, and not falling into the fantasy of easy success in trading.
Transcripts
becoming a successful Trader is a
marathon and not a Sprint now a lot of
people that try to become successful
they try to rush the process or they cut
Corners now in this video I want to talk
about things that you must do in order
to become a successful and profitable
Trader the first thing which is the most
important thing is have a Playbook have
a strategy right you need to have a
well-defined system well-defined Edge in
the market that allows you to make money
if you don't have this it will make it
very very difficult for you to be
profitable so in order to develop a
Playbook you must do the following
things number one you have to identify
the market criteria where this Playbook
or strategy will work number two you
need to have entry and exit rules for
this strategy that tells you that based
on these criterias you can enter or exit
now once you have these rules early on
you have to understand that the rules
will not really make sense you don't
have real backing for these rules and in
order to back these and make sense to
them you must back test you have to back
test the strategy you have to back test
the rules you have to refine that system
once you back test and you refine that
system jump into trading with small size
I know everyone wants to make a lot of
money when it comes to trading but trust
me guys start off with the strategy one
or two strategies not a lot build that
strategy build that Playbook with
criteria back test it once you back
tested go with the real account with
very minimal size so you can build
confidence build experience in the
markets and just see what you need to
tweak in that Playbook or strategy to
actually allow it to get better and with
that strategy or Playbook you have to
make sure you stay consistent with it
right so a lot of Traders I see they
develop a strategy but they change it
every day they don't have clear
criterias they don't have clear uh use
cases for that strategy that makes sense
they're adjusting every day depending on
how they feel or what they feel right
and that's not what you want to do you
want to have a clearcut system that is
well tested that is defined and then use
it the next thing is journaling now I
know a lot of people hate the concept of
journaling when it comes to trading but
I promise you that journaling and
tracking your data is one of the most
crucial aspects of becoming a profitable
Trader you have to have your stats you
have to know what strategies are
performing well what days do you perform
well what size you perform well under
what time periods you perform well or
bad under you have to understand what is
causing you to go on losing streaks how
how do you respond on losing streaks how
do you respond on winning streaks
without that data you can't really fully
maximize your trading capacity right so
for me it starts off with having a
proper detailed pre-market game plan it
starts off with me recapping every
single trade that I've taken what I did
well what I did wrong maybe I sold too
early why did I sell too early what did
I see what did I miss how can I improve
and guys keep in mind trading is a game
that we are constantly looking to
improve day over day year over year even
me I've been trading for 10 years I'm
still tracking my data I'm still
journaling and I'm still looking to get
better because there's never a moment in
trading where you get to a point where
you're like okay I made it I still
haven't gotten to that point where I
feel like I've made it and that's
something you have to keep on your mind
right that trading is something where
you have to keep going there's never
that point where you get at the top of
the mountain or top of the hill you have
to keep refining the system keep
updating keep improving and the moment
you stop the losses will catch up to you
now if you want to start journaling I
have a link down below for trade Zella
check it out get started if not just
just start journaling any possible way
you can and take it from there the next
one is stop focusing on your p&l as an
indication for success or not in the
markets I see a lot of beginner Traders
or Traders at all they'll say well this
month I didn't make a lot of money so I
traded bad I had a red month or a flat
month so I'm a terrible Trader and I
tell traders that don't take your p&l as
a measure of your success in the market
Market especially when you start out and
the reason for that is you're not going
to find consistency in the markets for
some time and that's a given it's going
to take you time right because you're
not going to find consistency that
consistency will not represent in the
dollar value of results like you won't
have a 10K month a 12K month a 15K month
and so on right but what you can do is
you can start measuring other aspects of
your trading that you're allowed to say
well I am improving well I am improving
in back testing I am able to find a
strategy that has a 40% win ratio well
now I've improved it to a 50% win ratio
I have gotten my win to loss ratio from
a two to a 2.5 I have gotten better at
cutting my losses I have gotten better
at allowing certain trades to run I have
gotten better at defining pre-market
movements or the game plans that I have
they are working a lot better if you
start shifting your focus onto things
that you can measure and that aren't p&l
based you will a feel a lot more
comfortable you will feel more confident
and then you won't you just won't get
discouraged right because imagine you're
trading for 6 months you're not
profitable like oh well it's not working
out let me quit but imagine you trade
for 6 months and you're like well this
is the progress I've made in 6 months
these are the areas I've improved in
that allows you to keep going and it
allows you to keep being focused on the
process keeps focused on the systems and
it allows you to focus on just getting
better and if you do that within some
time the money will automatically show
up my favorite one risk keep your risk
consistent risk is the most important
part of trading guys it's it's something
that we have to keep in mind if we want
to become profitable and successful
Traders we have to control one of the
things that we have control over and
that is risk how much risk do we put on
each trade how do we stay consistent
with risk especially starting out right
because starting out our main goal is to
stay alive as long as we possibly can
right we want to be able to put on as
many trades as we can without having
massive massive draw Downs or massive
blowups in our account so in order to do
that we keep our risk consistent we keep
it minimal and we keep it going for a
really long period of time until we
allow ourselves to build confidence so I
have a video I'm going to post up here
it's a whole risk video of our multiple
how to position size I highly recommend
check it out and just focus on the risk
component of trading the next thing to
do is have a pre-market Game Plan before
you take on any session you need to have
a routine you need to have a syst system
before every session so every time
before I take any trades or I start my
trading day or session whatever the case
may be I am looking at a game plan I am
building a game plan based on my
hypothesis based on what I believe are
the possibilities are happening in the
market I am aware of all of the economic
events that are happening I'm aware of
all of my key levels in the market I'm
aware of yesterday's movements upcoming
movements upcoming events and so on that
may possibly move the market and then I
also allow myself to get in the right
State of Mind so I have to do this 20 to
30 minutes before the Market opens or I
start my session so once again so I can
get in the right state of mind I have an
idea of what I'm doing what you should
not be doing is you should not wake up
first thing you do open your laptop and
put on a trade that's not the way to go
guys you want to make sure you have a
well- defined plan you want to make sure
you're in the right state of mind and
you are active to be able to put on
trades and be able to think properly and
you should make a rule and i' I've had
this rule for a really long time where
if I'm not in front of my computer 30
minutes before with the following items
I'm not allowed to trade for the day and
because we have no boss as Traders which
sounds cool it also has a flip side
because there's no one to hold us
accountable and no one to tell us hey
you you can't trade this day or hey this
is wrong we just kind of you know go on
tilt and go crazy in terms of just
putting on trades that don't make sense
if I have two losing trades I'm not
allowed to increase my size if I have
three losing trades I have to take a
step back when you set these rules and
you follow them you now allow yourself
to be aware of what is happening in your
trading you don't allow yourself to go
on massive draw Downs or you know go
massive tilts where you allow yourself
to blow your accounts so set these rules
and the first rule it should start from
in my opinion is your premarket game
plan so this is my favorite one stop
paying attention to everyone else on
social media especially the Traders stop
it it is destroying you it is very easy
to go on YouTube go on Tik Tok go on
Instagram and look at other Traders
posting these crazy gains and say well
how do I get there I need to get there I
need to do this I need to increase my
size and what that does is it just puts
you in a state of mind where you start
taking very stupid trades ignore all the
outside noise right just just stop stop
paying attention to all the social media
nonsense with Traders and so on and if
you need to get off get off because when
you start paying attention to multiple
people on social media you start looking
at different strategies different ways
to trade like well you know what this
guy did this so I'm going to copy them
well today this guy did this so I'm
going to copy them so it doesn't allow
you to build your own path and it also
builds like this fomo within yourself of
seeing other people make x amount of
money or x amount of success and it
forces your hand to take bad trades and
also stop paying attention to so many
different mentors that have different
trading Styles find one or two trading
styles that makes sense that you know
you like the way you like to trade and
stick to cons content around that if you
consume content around everything you
want to allow yourself to become super
great in one way of trading one style of
trading and so on and I'll tell you guys
99% of things that you see on social
media that you see on YouTube especially
in the trading space is nonsense it's
not real it's just it's not real people
are feeding you bad ways of trading and
feeding you complete R BS and it it's
very easy for that to create this um
illusion of I should be doing this or I
should be able to be profitable in two
months or three months it's not the case
stay in your lane give yourself time
increase your time Horizon and just
allow your journey to be your journey
own it and and and just be patient with
it and I promise if you don't cut
Corners if you don't go all over the
place and you you stick to the game plan
you stick to improving you don't look
around I'm just trying to make money you
will eventually get to a point of being
profitable and you will get to a point
of being successful in this field the
last one is getting out of fantasy land
it's very easy for us as traders to go
into fantasy land and think if I was to
buy here and I was to sell there I would
make so much money and I would love to
say that's true but it is far from the
truth guys the the truth is trading is
very hard and I've I've said this
countless times right trading is very
difficult there's very few people that
will make it in the game of trading now
from a competitive point I want trading
to be competitive I want it to be
difficult I enjoy that is difficult what
I'm saying is the more difficult it is
the better the reward so if you are in
your trading Journey realize that it is
going to be difficult be mentally
prepared know that hey this is going to
be difficult very few people are going
to make it these are the things that I
must do and I must stick to and I have
to be able to not only conquer the
markets I have to be able to conquer
myself and I know you guys have heard
psychology psychology psychology it's a
very big part of trading
110% and you need to understand that in
order to be successful there is a
component where you have to conquer
yourself but you also have to have a
strategy you can't you know they both
work hand inand conquer yourself make
sure you have a good defined strategy
put those two things together with the
element of protecting your downside
which is risk do it for months and
months and months and months
consistently day in and out and once
again when you look behind you you'll
see how far you've come and you'll see
how your p&l starts reflecting that with
that being said I hope you guys all make
it as profitable traders in the upcoming
year and I wish to see every single
person watching this succeed thank you
so much for watching guys
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