5 things i stopped doing to become a profitable trader
Summary
TLDRThe 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
📈 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.
🚫 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.
🧘♂️ 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.
Mindmap
Keywords
💡Trading Plan
💡Clarity
💡Journaling
💡Risk Management
💡Overtrading
💡Discipline
💡Emotional Trading
💡Intuition
💡Adapting to Market Conditions
💡Technical Analysis
💡Self-Mastery
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
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