8 Trading Rules To Become Profitable in 2024...

Summary

This 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

• 🏁 Becoming a successful trader is a long-term endeavor, not a quick sprint to the finish line.
• 📋 Develop a well-defined trading strategy or 'Playbook' that includes a clear edge in the market and specific entry and exit rules.
• 🔍 Backtest your trading strategy to refine and validate the rules before going live with real trades.
• 💼 Start trading with small sizes to build confidence and experience without risking too much capital upfront.
• 🔑 Consistency is key; stick to your strategy and avoid changing it frequently based on emotions or daily market fluctuations.
• 📊 Journaling and tracking your trading data is crucial for identifying patterns, strengths, and areas for improvement.
• 🛑 Focus on improving your trading process rather than solely on profit and loss (P&L) as a measure of success.
• 🚫 Keep risk management at the forefront of your trading approach to ensure longevity and avoid significant drawdowns.
• 📝 Have a pre-market game plan and routine to set up each trading session with a clear strategy and mindset.
• 🤐 Ignore external noise from social media and other traders; focus on your own trading path and avoid the fear of missing out (FOMO).
• 🧘‍♂️ 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

00:00

📈 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.

05:01

📊 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.

10:01

🚫 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.

Keywords

💡Playbook

A 'Playbook' in the context of trading refers to a well-defined strategy or system that outlines specific rules for entering and exiting trades. It is crucial for a trader to have a playbook to ensure profitability and consistency in the market. In the video, the speaker emphasizes the importance of having a clear and tested playbook as the foundation for successful trading.

💡Backtesting

Backtesting is the process of evaluating a trading strategy by applying it to historical data to see how it would have performed. It is a critical step in refining a trading strategy before applying it in live markets. The script mentions backtesting as a necessary step to validate and refine the rules of a trading strategy.

💡Risk Management

Risk management is the practice of identifying potential risks and taking steps to minimize or mitigate their impact. In trading, this involves controlling the amount of money at risk in each trade. The video script stresses the importance of keeping risk consistent and minimal, especially for beginners, to ensure longevity in the trading journey.

💡Journaling

Journaling in trading involves keeping a detailed record of trades, including outcomes and reflections on decisions made. It is a tool for tracking progress and identifying areas for improvement. The speaker in the video highlights journaling as a crucial aspect of becoming a profitable trader, as it helps traders understand their performance and make necessary adjustments.

💡Profitability

Profitability in trading refers to the ability to consistently make money over time. The video script discusses the misconception that profitability is solely measured by the P&L (Profit and Loss), but it also emphasizes the importance of focusing on process improvements and strategy effectiveness.

💡P&L (Profit and Loss)

P&L stands for Profit and Loss, which is a financial statement that summarizes the revenues, costs, and expenses incurred in a particular period of time. In the context of the video, the speaker advises against using P&L as the sole measure of trading success, suggesting that traders should focus on other aspects of their trading that indicate improvement.

💡Entry and Exit Rules

Entry and exit rules are specific criteria that dictate when a trader should enter or exit a trade. These rules are part of a trading strategy and are essential for executing trades consistently and effectively. The script mentions the need for clear entry and exit rules as part of developing a successful trading playbook.

💡Consistency

Consistency in trading refers to the ability to adhere to a defined strategy and execute trades according to a set of rules without deviation. The video emphasizes the importance of consistency, as it helps traders avoid impulsive decisions and maintain a disciplined approach to trading.

💡Pre-market Game Plan

A pre-market game plan is a strategy or set of guidelines prepared before the market opens, outlining the trader's approach for the day. The script highlights the necessity of having a pre-market game plan to ensure a trader is mentally prepared and has a clear direction before engaging in trades.

💡Social Media Influence

The influence of social media in trading can be significant, as it can affect a trader's mindset and decision-making process. The video script warns against the potential negative impact of social media, particularly the pressure to mimic the success of others, and advises traders to focus on their own journey and strategy.

💡Psychology

Psychology in trading refers to the mental and emotional aspects that influence a trader's behavior and decisions. The video script underscores the importance of psychological factors, stating that conquering one's own emotions and maintaining a disciplined mindset are key components of successful trading.

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