Video 07B: Starting Out as a Trader
* Starting out and advancing * Emotions * Fear and greed * Uncertainty
How to start out and advance
1. Be selective
ONLY take the best trades
1 -- 3 swing trades per day.
Look for trades like:
Major Trend Reversals
Pullbacks
Trading Range Reversals
Breakouts
2. Accumulation your points
Single point per day
if you trade 10 contracts size, you will make 100k usd per year.
if you trade 25 contracts size, you will make 250k usd per year.
if you trade 100 contracts size, you will make 1 million usd per year.
...
3. To make money
Must learn to read price action. Understand the footprint left behind by institutional traders.
Must follow what the institutions are doing.
Structure trades that parallel theirs.
Emotions
Computers are emotionless
Most of the trades in the markets are made by computers.
They based on math, and don't care about emotions.
If you are feeling: worried, fearful, greedy, hopeful, carefree, restless, tired, bold, confident or anything at all:
you will be unable to follow what the computers are doing.
you will lose money
Feelings are unavoidable
Feelings are not able to avoid. You can only reduce the effect on your decision making.
1. How to reduce their effect on your decisions?
If you care your money, if you care about lose.
You will NOT be objective.
You will NOT follow institutions.
You will lose moeny.
2. How to NOT care?
Trade the "I don't care" size
Trade small enough that I don't care
Or even 25% of "I don't care" size
Or trade Forex on a small size
3. Trade small
You won't be over excited if you make profit
You won't be over upset if you lose money
You won't lose big if you make a lot of wrong trade
Fear and Greed
Professional traders don't have fear or greed. They NEVER think about that.
Fear
1. Beginners have fears
They fear for losing money.
Or being seen as a weak person.
Or being judged as a addicted gambler.
This unfair to be judged like that.
If you buy a realestate, you still a trader. You buy a propery, hold for 3 years, and sell it.
Or anxiety, impatience, anger from spouse
Or being unsuccessful than self expectation (self sabotage)
Beginners think traders SHOULD make a lot of money.
2. Fear because you don't understand the market
Traders accept anything can happen, at any time.
It's not a big deal.
3. Skilled traders never afraid
They understand price action are 40% probability.
Understand what makes a reasonable trade.
Understand how to manage their trade.
they enter a trade with small positions
they allow to scale in if risks going high
They never risk themselves too much.
4. Skilled traders are confident to handle anything even a crash
They get more information from the crash.
They mentally go through checklist.
They do what is appropriate, including exit and wait.
Greed
1. Why no greed?
Because traders understand math.
If profit good enough for probability and risk, always take some, or all off. (TP)
They see the martket is stalling, they take profit.
They see there's a resistant level, they take profit.
2. Greed is wanting more profit than logical
Use your logic to guide your trade management.
3. Traders are human
Use feelings (fear, greed, confuesed) as Radar to find opportunities and make money
Your feeling will tell you what market is doing
Then do what is right at the moment.
When traders are confused, that is a very important feeling. Don't let it go, analyze logically what the market is doing. That means the probability is not as high as traders want it to be. So the market is not going too far up or too far down. (it's uncertainty)
Uncertainty
If not Fear and Greed, then what?
1. Uncertainty and dissapointment means trading range.
2. Urgency is missing a strong move (breakout)
1. Uncertainty and Disappointment
This often shows a Trading Range.
Buy at the range bottom.
Sell at the range top.
Take quick profits
2. Urgency
If you fee like I'm gonna wait for pullback for this strong trend
If you feel like you've missed a strong trend
the pullback NEVER comes, or usually very small/tiny pullback
It means you need to enter immediately at the market.
At least small position, use the appropriate stop.
Your stop position always at the same location, so you need to manage your size.
As long as you start hoping for a pullback, that's the time to buy it at least small.
Can trading really make money?
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