Trading Lessons ALL Beginners Need To Learn ASAP (INSTANT Results)

Summary

The video script emphasizes the importance of self-awareness and discipline in trading. It highlights the difference between explicit and implicit learning, with a focus on the latter being crucial for trading success. The speaker shares personal experiences, such as understanding market conditions, managing stop losses dynamically, and the pitfalls of emotional trading. They stress the value of a well-thought-out trading plan, realistic profit targets, and the need to recognize and manage psychological biases. The script also underscores the significance of taking breaks to maintain mental well-being and avoid poor decision-making in trading.

Takeaways

• 📈 Awareness of daily mistakes and habits can significantly reduce trading losses.
• 📚 Learning to trade is more about hands-on experience (implicit learning) than just reading (explicit learning).
• 🔍 Identifying your strengths and weaknesses in different market conditions is crucial for successful trading.
• 🚫 Avoid forcing trades in choppy or unclear market conditions to prevent unnecessary losses.
• 📊 Use the Average True Range (ATR) indicator to set dynamic stop-loss levels instead of fixed pip values.
• 🔄 Move your stop-loss to break-even only after the market confirms your initial analysis.
• 🏆 Hold onto winning trades and resist the urge to close them early due to fear of losing profits.
• 🔗 Understand market correlations to avoid doubling risk in correlated trades.
• 🔧 Start with conservative leverage and only increase it once consistent profitability is achieved.
• 📝 Use a pre-trade checklist to ensure disciplined adherence to your trading strategy.
• 🎯 Set realistic profit targets based on market structure and avoid overly ambitious take-profit levels.

Q & A

What is the key to preventing losses in trading according to the speaker?

The key to preventing losses is becoming more aware of daily mistakes and eliminating bad habits.

What are the two types of learning mentioned in the script?

The two types of learning mentioned are explicit, which involves reading and studying, and implicit, which involves learning through actual experience.

Why did the speaker initially struggle with trading despite reading many books?

The speaker struggled because trading is more about implicit learning, which comes from doing, rather than explicit learning from books.

What is the importance of understanding your own trading style according to the speaker?

Understanding your own trading style is crucial for knowing which market conditions you perform well in and which ones are yourryptonite, allowing you to trade more effectively.

What did the speaker learn about setting stop losses in trading?

The speaker learned that setting fixed stop losses doesn't account for market volatility and instead, using dynamic stop-loss levels based on the average true range (ATR) is more effective.

Why is it a mistake to move stop losses to break even too early in a trade, as per the speaker's experience?

Moving stop losses to break even too early can result in exiting trades prematurely, missing out on potential profits, as the market may still be in line with your initial analysis.

How does the speaker address the challenge of holding onto winning trades?

The speaker suggests asking oneself if there is an actual technical reason to exit or if it's just fear driving the decision, and emphasizes the importance of maintaining a level head.

What is the speaker's advice on using leverage in trading?

The speaker advises starting conservatively with no more than 2:1 leverage, keeping position sizes small until consistent profitability is achieved, and only then considering higher leverage.

Why did the speaker start using a checklist before entering trades?

The speaker used a checklist to enforce discipline, remove subjective emotions from trading decisions, and ensure that every trade met specific criteria based on their strategy.

What is the speaker's approach to setting profit targets in trading?

The speaker recommends setting realistic and achievable profit targets based on market structure, such as nearby supply and demand levels or using the ATR to assist with typical daily ranges.

How does the speaker manage their emotions and psychological biases in trading?

The speaker recognizes their own biases, such as the fear of being wrong or missing out, and takes breaks from trading when necessary to maintain mental well-being and clear decision-making.

Outlines

00:00

📚 Learning from Mistakes in Trading

The speaker emphasizes the importance of awareness in preventing losses, suggesting that small adjustments can significantly improve trading performance. They share their initial approach to trading, which involved extensive reading and learning strategies, but found that practical experience was more crucial. The distinction between explicit (theoretical) and implicit (practical) learning is highlighted, with the latter being more applicable to trading. The speaker also discusses the importance of understanding one's strengths and weaknesses in different market conditions and avoiding trades that don't align with one's expertise.

05:01

🔄 Moving Stop Losses and Managing Risk

The speaker talks about the evolution of their stop-loss strategy, moving from fixed stop losses to dynamic ones based on the average true range (ATR) indicator. They stress the importance of waiting for a clear market signal before moving a stop loss to break-even. The challenge of holding onto winning trades is addressed, with the speaker sharing their struggle to resist the urge to close profitable positions early. They also discuss the dangers of correlated positions and the importance of understanding market correlations to avoid excessive risk. The speaker's experience with leverage is shared, highlighting the need for conservative use and the development of a disciplined trading approach.

10:01

📈 Setting Realistic Profit Targets and Emotional Control

The speaker advises on setting realistic profit targets based on market structure and personal trading strategy, rather than aiming for high targets that may not be achievable. They discuss the benefits of taking multiple smaller profits over fewer larger ones for consistency in trading. The importance of understanding and managing emotions and psychological biases in trading is emphasized, with the speaker sharing their personal experiences with fear of being wrong and fear of missing out (FOMO). The speaker also highlights the value of taking breaks from trading when necessary to maintain mental well-being and make better decisions.

Keywords

💡Awareness

Awareness in the context of the video refers to the trader's consciousness of their daily mistakes and habits that may hinder their success in trading. It is a crucial element for improvement, as it allows traders to identify and rectify behaviors that lead to losses. The video emphasizes the importance of being aware of the types of market conditions one performs well in and those that are detrimental, which is key to becoming a consistent trader.

💡Explicit and Implicit Learning

Explicit learning is the process of acquiring knowledge through reading or studying, such as understanding trading strategies from books. Implicit learning, on the other hand, is the subconscious acquisition of knowledge through experience, which is more applicable to trading as it involves learning from actual market interactions. The video suggests that while explicit learning is useful for introducing new concepts, it is the implicit learning through hands-on experience that truly improves trading skills.

💡Market Conditions

Market conditions refer to the current state of the financial markets, which can vary in terms of volatility, trend, and liquidity. Understanding these conditions is essential for traders to make informed decisions about when to enter or exit trades. The video emphasizes the importance of recognizing opportunities within different market conditions and avoiding trading when the conditions are unfavorable.

💡Stop Loss

A stop loss is an order placed with a broker to sell a security when it reaches a certain price. It is a risk management tool that helps limit potential losses on an investment. The video explains the evolution of the speaker's approach to stop losses, from using a fixed number of pips to employing a dynamic approach based on the average true range (ATR) indicator.

💡Average True Range (ATR)

The ATR is a technical indicator that measures market volatility by calculating the average range of an asset's price movement over a certain period. It helps traders understand the typical price movement of a market and adjust their trading strategies accordingly. In the video, the speaker uses the ATR to determine a more realistic stop-loss level, accounting for the natural volatility of the market.

💡Risk Management

Risk management in trading involves the process of identifying, assessing, and prioritizing risks followed by coordinating and implementing appropriate actions to minimize, monitor, and control the impact of those risks. The video discusses various aspects of risk management, such as understanding market conditions, using stop losses, and avoiding correlated positions.

💡Leverage

Leverage in trading allows a trader to control a larger position in the market with a smaller amount of capital. While it can amplify profits, it also increases the potential for losses. The video warns about the dangers of using high leverage, especially for beginners, and the importance of starting with conservative leverage to develop good risk habits.

💡Checklist

A trading checklist is a set of criteria or conditions that a trader must satisfy before entering a trade. It helps to ensure that trades are based on a trader's strategy and risk management rules, reducing the influence of emotions and increasing discipline. The video describes the speaker's use of a checklist to avoid impulsive trading decisions.

💡Profit Targets

Profit targets are predetermined price levels at which a trader plans to exit a trade to realize profits. Setting realistic and achievable profit targets is important for maintaining consistency and avoiding the temptation to aim for unrealistic gains. The video advises traders to base their profit targets on market structure and use tools like the ATR to assist in setting these targets.

💡Emotional Control

Emotional control in trading refers to the ability to manage one's emotions and psychological biases to prevent them from interfering with trading decisions. Recognizing and managing emotions like fear, greed, and the fear of missing out (FOMO) can significantly impact a trader's success. The video stresses the importance of understanding and controlling these emotions to maintain a level head in trading.

💡Taking a Break

Taking a break from trading is a strategy to maintain mental well-being and prevent making poor decisions due to frustration or a lack of focus. It allows traders to step back, clear their minds, and potentially return to trading with a refreshed perspective. The video includes the speaker's experience of taking a break to refocus and adjust their strategies after a period of unprofitable trades.

Highlights

80% of trading losses can be prevented by being more aware of daily mistakes and bad habits.

Explicit learning is about reading and studying, while implicit learning comes from doing and experience.

Trading is more about implicit learning through experience rather than just reading about strategies.

Consistent trading involves understanding your own strengths and weaknesses in market conditions.

It's important to identify and avoid market conditions that are not favorable for your trading style.

Fixed stop losses may not account for market volatility; dynamic stop losses based on ATR are more effective.

Moving stop losses to break even should be based on market signals confirming your analysis.

Holding on to winning trades is challenging due to the fear of losing profits.

Understanding market correlations is crucial to avoid doubling risk in correlated positions.

Leverage can be a double-edged sword; it's important to use it conservatively when starting out.

Having a trading checklist helps in maintaining discipline and avoiding emotional decisions.

Setting realistic profit targets based on market structure is more effective than aiming for high targets.

Consistency in trading is more valuable than occasional big wins.

Recognizing and managing psychological biases and emotions is crucial for trading success.

Taking breaks from trading can help in regaining focus and mental clarity.

Transcripts

80% of your losses can be prevented if

you become more aware of your daily

mistakes and the little things that hold

you back just imagine how your account

would look like if you'd make those

small tweaks and eliminate those bad

habits you have here's what I've done to

reinvent myself as a

Trader when I first started trading I

tried to learn everything I could

through Reading lots of books I thought

that was the key if I just learn all the

strategies and techniques I'd be able to

make profitable trades but no matter how

much I read it never really clicked for

me in life markets it wasn't until much

later that I realized there are two

different types of learning explicit and

implicit explicit is reading about stuff

in textbooks while implicit is learning

through actually doing it over and over

and trading is way more of an impl bit

learning process than an explicit one

you can study patterns indicators and

theories all you want but nothing

teaches you like experience in life

Market it's all about recognizing

opportunities trading books and trading

videos like this one are most helpful

for introductions to New Concepts new

knowledge but what really improves your

skill is putting in the time at your

screen every trait imprints a lesson in

your subconscious understand ending

without that Hands-On practice the

explicit stuff can only take you so

far being a consistent Trader means

knowing your own game what type of

Market moves do you excel at reading are

you better trading breakouts do you

perform better when the markets are

quiet or when there's lots of movement I

had to learn this the hard way when I

first started I'd Force trades any time

time the price ticked up or down

regardless of what was really happening

I wasn't paying attention to the

previous price action during that day so

during choppy days with no clear

patterns I'd get stopped out with every

little wiggle more often than not I'd

end the day in Red without even

realizing why the key is being aware of

what types of market conditions you

perform well in and which ones are your

cryptonite when the conditions are in

your favor

that's when you absolutely got to be on

your aame but if the price action is

catchy and you get that feeling in your

gut that you're going to struggle you

just walk away it's also crucial that

you take some time to analyze what

exactly disturbs you is it Choy low

volume gaps fake outs ranges fast price

movement pinpointing your weakness is

half the battle of learning to overcome

them so pay attention to the different

market conditions and only trade what

you

[Music]

understand when I first started trading

I thought the way to do it was to just

set my stop loss 30 bips below my entry

on every trade that way it would be

simple right well this strategy didn't

work out so well for me after losing way

more trades than I was winning I soon

realized that the markets don't move in

a nice predictable way during 1 hour

they jump around a lot in a short period

and the next one they barely move at all

so setting those fixed stop losses

didn't account for the natural

volatility of the market that's when I

started using the average true range or

the at this indicator shows you on

average how far the market has been

moving each day recently seeing that

helped me understand why just using a

fixed number of Pips wasn't a good

approach because different markets and

time periods have different levels of

volatility so now when I take a trade I

look at the ATR and use it to help me

determine a dynamic stop- loss level

rather than a fixed one I also pay

attention to important price points like

round numbers moving averages view up

that could act as support or resistance

that gives me more flexibility to avoid

unnecessary losses from normal Market

fluctuations

another important topic when to move

your stop loss to break even on the

surface it seems logical once you're no

longer at risk of losing why wouldn't

you lock that in in the past I made a

mistake all the time of adjusting my

stops too early before the market had

really proven itself all I was doing was

taking the risk of the table but I also

kept my upside potential to soon I'd get

stopped out of Trades that kept running

now I only try to move my stop to break

even once the market gives me a clear

sign that my initial analysis was right

for example if the price tries to deep

back down to my entry point but fails

that tells me my thesis is still valid

or if it makes a higher high or a lower

low confirming my Trend the key is

waiting for strategic level s not

arbitrary ones psychologically it feels

good to be risk-free but statistically

it affects your profits long

term something that is still a real

struggle for me is holding on to winning

traits you hear it a lot cut your losses

and let the winners write it seems so

simple but it's so hard to fight that

urge to close out a position early you

know the feeling when you place a trade

and things are going great as your

position goes in profit immediately and

then the market starts to turn around a

bit and you can feel yourself getting

nervous your hands are then drifting

over the close botton just waiting for

the smallest reason to exit and most of

the time you exit it's because you are

scared of giving back those profits

you've gained so far but most of the

time if you took an objective look at

the charts nothing really changed from a

technical perspective the move was still

intact but you settled for a small

profit and here comes the worst part the

market keeps going like you previously

expected you let your emotions get the

best of you and you've missed out on way

more profit potential it's a common

thing in trading and a really valuable

lesson about keeping a level head this

is one of my biggest struggles even

after so many years of trading when I

feel that that Panic is starting to

settle in on OPP position I ask myself a

simple question is there an actual

technical reason to exit or I'm just

scared nine times out of 10 it's just

fear

talking something I've really been

focusing on lately is understanding

correlations between different markets I

might want to trade let me give you an

example let's say there's a bullish

pattern setting up on the pound dollar

pair and you take a long position at the

same time pound yen is also showing

signs of strength since they both

involved the British pound you might

think great I'll double up by going long

on both big mistake as you didn't

properly account for how close the pound

Bears tend to move together so if the

pound suddenly pulls back it will

trigger losses on both traits at the

same time your risk is doubled due to

those correlated positions be very

careful about your exposure before

entering multiple traits analyze how the

under Lings typically interact are they

usually in sync like the pound paars or

do they have a history of Divergence at

times knowing the correlations will help

you avoid stacking on too much risk in

One

Direction leverage can be a real double

edge sword for tra ERS especially when

you're starting out I definitely learned

that the hard way when I first got

access to leverage it was super exciting

because I thought great now I have way

more money to place bigger trades and

make bigger profits the result within a

few weeks I had blown out my entire

small account the problem was that while

I was making money on some trades one or

two losses totally wiped me out because

my position sizes were pumped up way too

big with a ridiculous leverage of 500 to

one a small move against me wiped out

days of wins it was a really expensive

lesson using leverage safely takes

experience I always stress starting very

conservatively no more than two or 5 to

one leverage at most keep position size

as small until you can prove you can be

consistently profitable leverage can

come later once good risk habits are

formed as I started to take trading

seriously I realized having a lose plan

in my head just wasn't cutting in I was

too willing to bend the rules if I

really wanted to take a trade that's

when I started writing out a checklist

of everything I look for before entering

a position now before every trade I go

through it Point by point is the chart

set up right price action looking how I

want indicators aligned Supply or demand

respected it forces me to slow down and

really analyze objectively I found it so

valuable because it takes the subjective

emotions out there's no room for

ambiguous decisions either the tradeit

hits all the boxes or it's a nogo and

having it written out makes it very

clear if I'm about to break my own rules

the checklist has done one thirst for my

discipline now I avoid so many traits

now that I know deep down they aren't

high probability based on my

strategy when it comes to setting profit

targets I see a lot of Traders make the

mistake of aiming way too high without

really thinking it through I did in the

same way I'd enter a trade and slap on

some ridiculous takeprofit level 100

Pips away thinking the bigger the target

the better well the result my win rate

decreased a lot you need to have

realistic achievable targets based on

actual Market structure things like

nearby supply and demand levels that

could reasonably stop a move or using

the ATR to assist the typical daily

ranges and taking partial profits within

that band the key is setting targets

that balance probability of success with

adequate reward I'd rather have five

winning trades at 20 Pips each than one

out of five going for 100 Pips is not as

sexy aiming for a few Pips but it's way

more consistent in the long run

consistency trumps occasional big wins

every single

time understanding your emotions and

psychological biases is so important in

trading we all have fears that can

affect our success if left unchecked we

all have inner trading demons a big one

for me was the fear of being wrong I had

second guess winning trads because I was

worried I might miss something or I'd

hold on to losers trying to be right

another struggle is the fear of missing

out feeling like I had to jump in a move

whether my strategy is set to or not I

also used to bail early on WIS due to

warries St reverse managing ego is

another one recognizing your patterns

early is key find out what are your own

biases and what can you do to diminish

their influence on your

trading and sometimes taking a break is

the best move at the beginning of last

year no matter what trade I put on I

seem to pick the wrong side every single

time and it was getting frustrating

watching my profit is decreasing and my

mind wasn't as sharp as usual I started

questioning every decision and second

guessing myself I needed to step aside

as much as it pained me to leave the

action I knew staying in this mental

state would only lead to more bad

decisions and losses I had to clear my

head so I decided to take a break no

charts no books no trading apps no

videos for 2 weeks and it wasn't at

first I really missed the excitement and

the rush of placing a trait but it was

the time to refocus after that period I

was ready to get back in the game and

with a cool head I came up with some

minor adjustments to my strategies

taking breaks from Trading is absolutely

necessary when things don't go as

planned the markets will always be there

it's more important we take care of our

mental

well-being