Proving Every Strategy Fails + A Guide On What DOES Work.

Summary

This video delves into the realities of trading, stressing that no system or strategy works long-term without the discretion of the trader. It highlights the importance of intuition and experience in making successful trades, rather than relying solely on popular systems or indicators. The video emphasizes that personal learning, recording trade performance, and journaling are essential for refining one's approach. It advocates for adapting to individual strengths and weaknesses, focusing on specific trading conditions, and ultimately developing an edge through continuous trial and self-reflection.

Takeaways

• 😀 Systems and strategies in trading only work long-term when discretion is applied; blindly following a set approach won’t work.
• 😀 Trading success relies on understanding price action through experience, not relying solely on indicators or systems.
• 😀 Intuition and discretion in trading are built through practice and experience, much like learning a musical instrument.
• 😀 Traders should focus on their strengths and find the type of trading that suits their personal style, whether it's scalping or long-term strategies.
• 😀 Journaling and recording trades help identify patterns in performance and improve decision-making in trading.
• 😀 Don't limit yourself too early with a specific strategy; experiment to find what works best for you over time.
• 😀 Trading involves a balance of structure and adaptability; be open to adjusting your strategy based on new data and experiences.
• 😀 Knowing when to trade and when to sit out is crucial to successful trading, as overtrading can lead to unnecessary losses.
• 😀 The most important improvements in trading come from understanding correlations and specific price action patterns relevant to your approach.
• 😀 Record your trading sessions and analyze past performance to learn from mistakes, identify strengths and weaknesses, and avoid repeating errors.

Q & A

What is the main idea behind the speaker's perspective on trading systems and strategies?

The speaker argues that all trading systems and strategies work only temporarily and are ultimately dependent on discretion. No system is universally effective long-term; success in trading is determined by when and how a trader chooses to follow or ignore a system.

Why does the speaker compare trading to learning an instrument?

The speaker compares trading to learning an instrument to emphasize that just watching videos or reading books won't make someone proficient. Like playing an instrument, trading requires hours of hands-on practice to develop the skills and intuition needed for success.

How does the concept of discretion play a role in successful trading?

Discretion is key in trading because it involves the ability to interpret market conditions and make decisions based on experience and intuition. It cannot be taught or automated, and it is the only factor that differentiates successful traders from those who struggle.

What is the speaker's view on trading systems promoted by gurus and YouTubers?

The speaker believes that many trading systems promoted by gurus or YouTubers are ineffective and only serve to make money for the creators through mentorships, courses, and ad revenue. These systems often fail because they rely on the trader’s ability to interpret market conditions through discretion.

Why does the speaker stress the importance of recording and reviewing trades?

Recording and reviewing trades is essential because it allows traders to identify patterns in their performance. By documenting their trades, traders can learn from both successful and unsuccessful trades, refining their strategies and gaining insights into their strengths and weaknesses.

How does journaling contribute to improving a trader's performance?

Journaling helps traders internalize lessons and track their progress over time. It prevents traders from forgetting important realizations, and it allows them to analyze their mistakes and successes, which ultimately leads to better decision-making and improved performance.

What role does time of day play in a trader's performance?

The speaker explains that volatility varies throughout the day, and different traders may perform better at different times. It’s up to the individual to determine when they are most effective by analyzing their performance across different time periods.

What does the speaker mean by 'price action is fractal'?

By saying 'price action is fractal,' the speaker means that price patterns can repeat across different time frames. This suggests that traders can use the same strategies across various chart times (like 30 seconds, 15 minutes, or 2 hours) as long as they adapt to the conditions of each time frame.

Why is it important for traders to avoid limiting themselves to one strategy too early?

It is important for traders not to limit themselves to one strategy too early because they need to gather enough data and experience to understand what works best for them. The speaker emphasizes the importance of experimenting and finding a strategy that aligns with individual strengths.

What does the speaker mean by 'not trading' being as important as trading itself?

The speaker highlights that knowing when not to trade is just as important as knowing when to trade. Avoiding trades when market conditions are unfavorable or when one's strategy is not applicable is crucial for long-term profitability, as trading recklessly can lead to significant losses.