4TB of Trading Data In 12 Minutes…

Summary

The video script emphasizes the critical role of data in trading for long-term success, comparing it to essential business analytics. It dispels myths about mechanical trading and the importance of intuition and experience in making informed decisions. The speaker, drawing from extensive data analysis, argues against common technical analysis practices, advocating for a more data-driven approach that aligns with institutional trading strategies.

Takeaways

• 📊 Data is essential for long-term success in any business, including trading, as it helps in making informed decisions based on past performance and trends.
• 🤔 Not understanding data can lead to a lack of clarity on what is necessary for a hedge fund to succeed in trading and may result in taking unnecessary risks.
• 📈 The speaker emphasizes that data is not just about journaling trades or relying on personal feelings about trades, but rather on objective, institutional-grade analysis.
• 🔢 Data should be used to characterize the behavior of a currency or asset over the long term, helping traders understand market patterns and make better decisions.
• 🚫 The script refutes the idea that mechanical trading leads to consistent results, stating that it is not an institutional approach and can lead to poor outcomes.
• 💡 Institutional traders use intuition based on experience and data, rather than blindly following mechanical strategies or predetermined risk ratios.
• 📉 Cutting losses early is crucial in trading, and one should not cling to predetermined win ratios if the market conditions do not support the trade.
• 📈 Holding winners is more complex and requires understanding market movements and managing trades effectively, especially in markets that move quickly.
• 📚 Traditional technical analysis is considered less important by institutions, which prioritize data, fundamentals, and risk management over chart patterns.
• 🧐 The speaker shares personal insights from years of trading and testing, highlighting the importance of critical thinking and not just following popular opinion in trading.
• 🔑 The takeaways from analyzing terabytes of data stress the importance of understanding market behavior and using that knowledge to make trading decisions rather than relying on subjective observations.

Q & A

What are the four potential problems a viewer might have with data and trading according to the script?

The script outlines four problems: A) Not knowing what data is and its potential for trading; B) Not understanding why data is essential for a hedge fund's success in trading; C) Having a misconception about what data is; D) Believing in mechanical trading and trading psychology without a clear understanding of data's role.

Why is data important for long-term success and growth in trading?

Data is important because it is a requirement for long-term success and growth in any business, including trading. It helps in making informed decisions based on historical patterns and behaviors, which is crucial for consistent performance.

What is an example given in the script to illustrate the importance of data in business?

The script uses the example of selling t-shirts, where observing which color sells out faster (black or white) helps in making data-driven decisions on stocking more of the popular color.

What does the speaker claim about mechanical trading and its results?

The speaker claims that mechanical trading leads to inconsistent results and is not an institutional concept, suggesting that relying solely on mechanical systems without considering data and other factors can be detrimental to trading success.

What is the speaker's stance on the use of intuition in trading?

The speaker suggests that intuition plays a significant role in trading, especially for institutional traders. It is used in conjunction with data and experience to make decisions about when to enter and exit trades.

According to the script, why is traditional technical analysis not sufficient for successful trading?

The script argues that traditional technical analysis is not sufficient because it is typically used after considering data, fundamentals, and risk management. It should be a supplementary tool rather than the primary decision-making method.

What is the speaker's view on the common advice 'cut your losses and hold your winners'?

The speaker agrees with the advice but emphasizes that it should be based on data and experience. Cutting losses should be done when the market conditions violate the trader's strategy, and holding winners should be managed carefully, especially in markets that move quickly.

What does the speaker suggest is a myth about trading based on liquidity and order block?

The speaker suggests that the idea of 'liquidity plus order block equals a good trade' is a myth. This approach does not inherently guarantee good trades and is not a method used by institutions.

What is the speaker's opinion on the role of data in determining entry and exit strategies?

The speaker believes that data is crucial for characterizing the behavior of a currency or asset over the long term. It helps in understanding the market's typical patterns and behaviors, which in turn aids in making informed entry and exit decisions.

What does the speaker mean when they say that data is not journaling trades?

The speaker argues that journaling trades, or writing down personal feelings and thoughts about trades, is not the same as using objective data. Data should be based on market behavior and patterns, not on subjective observations or emotions.

What is the speaker's advice for traders who want to improve their trading strategies?

The speaker advises traders to start testing their strategies with data, learn from experience, and not to rely solely on mechanical trading or traditional technical analysis. They should use data to understand market behavior and make informed decisions.

Outlines

00:00

📊 The Importance of Data in Trading

The speaker emphasizes the critical role of data in trading, comparing it to essential business analytics. They explain that data is necessary for long-term success, using the analogy of a business owner adjusting inventory based on sales data. The speaker clarifies misconceptions about data, stating that it is not merely journaling trades or relying on personal observations. Instead, data should be used to understand market behavior and make informed trading decisions. They also debunk the myth of mechanical trading leading to consistent results, arguing that institutional trading relies on a combination of data, intuition, and experience.

05:00

📈 Data-Driven Trading Insights

This paragraph delves into the speaker's personal journey and learnings from analyzing vast amounts of trading data. They argue against mechanical trading, asserting it leads to inconsistent results and is not a strategy used by institutions. The speaker shares insights from their experience, suggesting that traders should use data to identify patterns and behaviors in the market. They also discuss the importance of risk management, advocating for cutting losses and holding onto winning trades, but with a flexible approach that adapts to market conditions. The speaker criticizes the over-reliance on traditional technical analysis, suggesting it should be a secondary tool after considering data and fundamentals.

10:01

💡 Practical Trading Wisdom from Data Analysis

In the final paragraph, the speaker shares practical advice for traders based on their data analysis. They discuss the nuances of cutting losses and holding onto winning trades, especially in different markets like currencies and indices. The speaker stresses the importance of not rigidly adhering to fixed risk-reward ratios but instead using market conditions and experience to guide decisions. They also reiterate the limited utility of technical analysis in institutional trading, suggesting it's a supplementary tool rather than a primary strategy. The speaker concludes by offering to share more insights in a potential follow-up video, highlighting the depth of their data-driven trading knowledge.

Keywords

💡Data

Data refers to the collection of information or facts from which conclusions can be drawn. In the context of the video, data is essential for understanding market behavior and making informed trading decisions. The script emphasizes the importance of data in long-term success and growth in trading, likening it to a business analyzing sales data to determine stock levels.

💡Mechanical Trading

Mechanical trading is a system where trades are executed based on pre-defined rules without human intervention. The video argues against mechanical trading, stating that it leads to inconsistent results and is not an institutional approach. It is contrasted with the use of intuition and experience in making trading decisions.

💡Intuition

Intuition is the ability to understand or know something immediately, without the need for conscious reasoning. The script suggests that intuition, informed by experience, plays a significant role in institutional trading. It is used to determine when to enter and exit trades based on a 'gut feeling' that is supported by a trader's accumulated knowledge.

💡Risk Management

Risk management is the process of identifying, assessing, and controlling risk. In the video, it is implied that risk management is a fundamental aspect of institutional trading, which includes setting appropriate risk ratios and deciding when to cut losses or hold onto winning trades.

💡Hedge Fund

A hedge fund is an investment fund that aims to generate absolute returns by employing various strategies to reduce risk and maximize returns. The script suggests that data is crucial for the success of a hedge fund in trading, as it helps in making informed decisions.

💡Technical Analysis

Technical analysis is a method used by traders to analyze and predict the future price movements of financial instruments based on past performance. The video criticizes traditional technical analysis, stating that it is less effective when used in isolation and should be a secondary tool after considering data and fundamentals.

💡Liquidity

Liquidity refers to the ability to buy or sell an asset quickly and easily without affecting its price. In the context of the video, liquidity is mentioned in relation to trading strategies, suggesting that understanding market liquidity is important for making informed trading decisions.

💡Order Block

An order block is a concept that suggests placing trades in areas of high liquidity. The script dismisses the idea that simply trading in an order block guarantees good trades, arguing that this is a myth and that trading decisions should be based on more comprehensive data analysis.

💡Risk Ratio

Risk ratio is the ratio of potential loss to potential gain on a trade. The video discusses the importance of understanding risk ratios and adjusting them based on market conditions and the trader's experience, rather than sticking to fixed ratios.

💡Journaling

Journaling in trading refers to the practice of recording trades and reflections on trading decisions. The script argues against the effectiveness of journaling, stating that it is not an institutional process and does not provide objective data for improving trading strategies.

💡Institutional Process

An institutional process refers to the systematic and professional methods used by large financial organizations, such as hedge funds, to conduct their operations. The video emphasizes that true institutional trading relies on data, fundamentals, and risk management, rather than on mechanical or intuitive methods alone.

Highlights

Data is essential for long-term success and growth in trading and business.

Data helps differentiate what is necessary in an entry model or strategy and what is not.

Mechanical trading can lead to inconsistent results and is not an institutional concept.

Intuition plays a significant role in institutional trading, not just mechanical processes.

Risk ratios such as 1:3 or 1:5 are not inherently meaningful without market context.

Experience and intuition are critical in determining when to enter and exit trades.

Cutting losses early is a key practice in trading, supported by data and experience.

Holding winners is more challenging, especially in markets with quick movements like indices.

Traditional technical analysis is less effective without a foundation of data and fundamentals.

Institutions use technical analysis as a final step, not the primary decision-making tool.

Data is not about journaling trades, which is subjective and not an institutional process.

Blind observations without data can lead to incorrect conclusions and poor trading decisions.

Testing with data is crucial for understanding market behavior and improving trading strategies.

Data helps characterize the long-term behavior of a currency or asset for better trading decisions.

The importance of using data to prove theories and make informed trading decisions.

The speaker's personal journey from relying on technical analysis to understanding the importance of data.

A call to action for traders to start testing now to gain experience and improve their trading strategies.

The speaker's offer to create a second video to delve deeper into the insights gained from terabytes of data.

Transcripts

straight to the point here some of my

dat are right

here and I've got a lot more hair as

[Music]

well and I've got way more in the pages

in the background and I've got way more

than all of this back in my office in

East London I'm overseas at the moment

which is quite unfortunate but you click

this video for a reason and I'm going to

show you exactly what you

need so this is what you look like right

now and you got a few problems you've

got one of these four

problems a you don't know what data is

and you want to learn what it could do

for your trading that's number one B you

don't know why a data is required for a

hedge fund to succeed in trading um

number three or C whatever you want to

call it you've been saw a lie on what

data is you're a mechanical Trader and

you also believe in trading psychology

now I'm going to get more into these in

specific videos but today we're here for

one reason only

now why is data so important it's a

requirement when it comes to long-term

success and growth in every business so

many people aren't really aware that we

look at data for everything right when

it comes to a business you're looking at

the monthly requiring Revenue there is

going to be data within that imagine you

have two shirts right you've got a white

one and a black one let's say the black

one sells out really quickly you're

going to need to look at the data so you

don't order the same amount you're going

to need to order more black ones because

they sell out really easily and you're

going to want to be able to sell more of

those right that's going to be a very

simple form of data but you get my point

hedge funds know this all of the top

gurus know this but you don't but the

funny thing is what I'm telling you is

literally needed if you don't do this

you're not going to get anywhere you can

do technical analysis for 20 years it

doesn't matter you're never going to get

there if you don't do what I'm doing

well you're not here to have a a good

one month two months 3 months you're

here to have a good career right you

want to be able to literally go from

where you are right now perhaps you're

working a job perhaps you're you know

you have a few funded accounts you blown

a few funded accounts and you want to

become consistent I'm just going to be

brutally honest with you so subscribe

right now without data you're not really

aware of what is needed and what isn't

needed you're just taking a shot in the

dark I explain this quite well when it

comes to the t-shirts but you're just a

bit mad if you're trading something that

you don't have actual data on right just

looking up YouTube videos of high winway

strategy I remember back in the day you

know like 5 6 seven years ago retail

trading as you would call it was called

institutional at some point right people

were selling the program saying yeah

this is institutional this and that

which is obviously not true right and

then 3 4 years ago we were told that

funded accounts are actually given us

real Capital but now we obviously know

that they're not giving us real Capital

2 years ago people were saying ICT is

institutional but now we're quite well

aware that it's not right so how many

lives do you need to go through and how

many years does it need to take you to

get a clear picture that's real

question okay what is and isn't data

data is not journaling your trades right

this idea of people journaling their

trades and being like guys make sure

that you Journal this and that this is

not day it's a bunch of anyways

it's it's nothing really important tell

me what's objective about writing down

how you feel about that stupid trade

that you took today what's objective

about that you're going to feel

something different every day and it's

going to trickle into your Trading right

so what does that have to do with your

trading it doesn't make any sense and

the people that also say the reason why

you're not winning because you're not

journaling or stupid they really really

are because journaling isn't an

Institutional process I'm going to tell

you everything that's an Institutional

process journaling is just a substitute

excuse lousy excuse to not have data

data is not your blind observations

trust me guys when I tell you you can't

just look at your Trad in and be like

usually when this happens this happens

x equal y can't do that you got 10

losses and 10 wins 50% win rate right

here so here's the thing if you look at

your losses and you say why am I losing

50% of the time and I'm going to make it

relatable to your ICT people right

imagine let's say that you're short in

the market or trading the market to the

downside when there's liquidity above

your high why all this liquidity below

your low and you're trying to buy let's

imagine this the case right you you

might look at all of your trades and say

very often there's liquidity below or

above it based off of Just Pure

observation just first hand observation

you're going to try to get rid of

trading that way but the problem with

that is that you're going to lose

everything and the reason why is because

you didn't look at the wins you might

realize six out of 10 wins play out like

that right so it's not in your interest

to get rid of it but you might be like

there's 10 losses that you're getting

rid of just for six wins but remember

risk ratio if you're trading a 1: one

then yeah sure right but you're trading

like a 1 to three 1 to four it makes a

lot more sense to just keep it and it's

just going to harm your trading if you

get rid of it and you're not going to

have 10 wins and 10 losses you're going

to have hundreds to thousands I've got

like roughly 15,000 testing trades so

you're going to determine Things based

off of a larger number can't do that on

100 trades un less there going to be

historical price dat on Real Time data

I'm going to talk about the differences

sometime but we're going to talk about

this you're going to use data to

characterize the behavior of a currency

or asset longterm basically what you're

going to do is you're going to know what

your your see your SPX does most of the

time and how to trade alongside that

information you're going to go off for

pattern recognition you're going to look

at Behavior you can't determine nothing

about the market without data

institutions do this and if you don't

believe me about institutions not being

mechanical there's a university in

Milton keing called the open University

and they've actually written studies

about this and they prove this concept

so I'm going to put that right in front

of the screen real

quick so data is used to differentiate

what is needed in an entry model or

strategy and what isn't needed right

there's so many things that you think

are needed within your trading but

they're not if you look at every single

Theory from the beginning of time you're

going to see that data is literally used

in everything to prove

anything so here we are what I've

learned from fre terabytes of data these

are some of the most important things

that I've genuinely learned it's

literally taken me about 8 years and

15,000 or 25,000 testing trades to come

to this conclusion and this is some of

the most important things ever in

trading mechanical trading leads to

terrible inconsistent results this is

not an Institutional

concept now a lot of people are going to

be mad because they're going to be like

what but we're trading the algorithm no

you're not man it's an objective truth I

don't know why you would get mad and P

to that ego of wanting to be right it's

going to lead to you just staying in the

same position because you can't accept

anything whoever tells you that you

should be trading mechanically doesn't

know nothing I want you to rationally

think I want you to be critical thinkers

right I don't want you to just listen to

people right most of these gurus and you

know this are only one two steps ahead

of you they've got in a payout if

they're trading prop firm accounts or

they probably manage some sort of funded

account mechanical tra trading

is a + Bal X meaning and I'm going to

relate it to you liquidity plus order

block equals good trade assuming that we

do liquidity in the order block

correctly right this right here is a

stupid myth this right here does not

exist guys and we can go back to the

same study from the open University in

Milton keing if this was the case

trading would be a lot more easy number

one number two institutions were not use

intuition as their biggest factor to

them getting good trades so the second

one right here just putting random

numbers of one to three or 1 to five all

doesn't mean anything why you shouldn't

come into the market and be like I'm

going to catch a one to3 1 to five

because think about it everything that

you're doing should be inherent to the

market inherent to the market means you

didn't just come up with it yourself so

when we go back to Mechanical trading

you came up with that you decided that

that is what you should be doing you

didn't come up with that using your

critical thinking rather you just listen

to someone else and you just did it that

is what I mean so how do you know it's

inherent to the market how do you know

that the data can support that they

can't now when it comes to trading a 1

to three or 1 to5 a lot of people are

very fixed on the risk ratio here's what

you're going to do you're going to get

in the market when it looks good and

you're going to use your intuition to

kind of determine when it looks good

you're going to see it and you're going

to say yes it makes sense

why because you're going to lean into

your experience this is what

institutional Traders do if you don't

have experience start testing now and

you're going to get out of the market if

it doesn't make sense meaning the trade

could be in a 1 to two but you might

just want to hold it to a 1 to three but

you see it violate something it doesn't

look really promising so what do you do

you shouldn't be trading it why because

what's going to happen more often than

not you're going to see it just hit your

stop loss right and that goes with 1 to

three 1 to 5 Etc some trades you can

hold for very long you can hold them for

1 to 10 but it just depends you want to

make sure that you're on the safe side

and you're not really Clinging On to

these

numbers we've been told this many times

cut your losses hold your winners I did

not believe it until I started testing

if you're trading a currency pair you

shouldn't be taking a 1% loss if you're

risking 1% you should be taking

4.5 3214 and all these kinds of small

numbers you should be able to look at

the market and be like yeah that's not

going to work out I'm leaving the market

that's what you should be doing now it's

really easy to cut losses on currencies

and the reason why is because they don't

move as quickly as Industries do so this

is something that you should literally

be practicing what is it that violates

your trading and you like I don't want

to be in there when you determine that

you can start testing

that a currency it might be easier to

cut your losses when it comes to

currencies but to hold your winners is a

lot harder meaning a price fluctuation

on currencies is not going to be that

high generally speaking right if you're

trading the 15minute time frame and

you're like on year USD or something

you're not going to see it hit a 1 to

five a 1 to six 1 to 7 during the

session you're not going to really see

that but on an indic you could

definitely see that which means that you

can't cling on to your wins too much now

on indices you could do that really

easily you can hold 1 to 10 one to 15s

and stuff but you got to know how to

manage the trade because the market is

moving really quick

and you're going to get these erratic

price movements and it could be a very

good thing but it's much harder to cut

your losses traditional technical

analysis is garbage why do I say this

it's because an institution relies on

data relies on fundamentals and relies

on risk management and all these things

technical analysis comes when everything

else is finished that's when it's

effective institutions do everything and

then at the end of it they just put a

support and resistance line and they

just find a way to just get in on the

market that's what technical analysis is

for technical analysis is not to make

these crazy trading decisions off of

you're supposed to use it to kind of

tell where you can get in please don't

fall for this trap and the reason why

I'm saying this is because I spent 14 to

18 trying to figure this out I'm 22 now

it's been a few years and I've actually

become really really successful in the

market with my Daya these are the

general things I've learned there's

going to be a lot more if you want me to

make a second video I can go into the

additional two terab of the at I could

talk about one of these specific things