0:02 If I had to show one image to explain
0:05 why so many traders struggle, this would
0:07 be it. Right here is where most traders
0:09 get stuck. And the interesting thing is
0:11 most don't even realize it. The reason
0:12 I'm making this video is because
0:14 literally no one talks about this. And
0:16 it's crazy because it's one of the most
0:18 important things in trading. Now, this
0:20 video is not going to feed you a
0:21 fantasy. It's not going to pretend that
0:23 trading is easy. It's not going to waste
0:24 your time on things that just don't
0:26 matter. What this video is going to do
0:27 is it's going to show you the real
0:29 reason so many traders struggle. and
0:31 it's probably not what you might think.
0:32 It's going to show you how to trade
0:34 based off reasons, how to make informed
0:36 decisions, and then walk through my past
0:38 trade that you can actually learn from.
0:41 This video is exactly what I wish I had.
0:42 So, if you're serious about trading and
0:44 genuinely want to learn, let's get into
0:47 it. Okay, so section one, thinking you
0:49 have an edge does not equal actually
0:50 having one. This is probably one of the
0:53 biggest roadblocks so many traders face
0:55 because they're trading thinking they
0:57 have an edge when in reality they don't.
0:59 Right now, there is a reason for this.
1:01 If you go online and you search up
1:03 trading, you are going to get absolutely
1:05 bombarded with all of these types of
1:06 trading videos that tell you that
1:08 trading is so easy. It's so simple. All
1:10 you need to learn is some simple
1:11 candlestick formation. You can become
1:14 profitable when in reality, this stuff
1:16 isn't real. Okay? This is basically just
1:18 the McDonald's of trading, right? It's
1:20 super easy to consume. It's very tasty,
1:21 but it doesn't give you anything. It's
1:23 not really worthwhile your time, right?
1:24 I'm sure you can learn a few things, but
1:25 if you want to genuinely become
1:27 profitable and make consistent money,
1:29 these videos are just not enough. Right
1:31 now, they break down basically just
1:32 technical analysis, more specifically
1:35 candlestick analysis. And you may be
1:37 thinking, okay, candlestick analysis,
1:38 technical analysis. I've just said that
1:41 those videos are bad. So, is technical
1:44 analysis even important right now?
1:47 Absolutely yes. Okay. Yes, absolutely.
1:48 Technical analysis is super important. I
1:50 use technical analysis basically every
1:52 single trade I take, but I use it in
1:55 conjunction with something else. Now,
1:57 how much you use technical analysis,
1:58 like the emphasis you put on your
2:00 trades, can actually depend on what
2:02 market you're trading in, right? So, we
2:05 can basically break off the markets into
2:07 centralized and decentralized for the
2:09 most part. Centralized means that all
2:12 orders are routed through one central
2:14 exchange. Okay? So let's just say here
2:17 we have one central exchange and we have
2:20 some participants. All of their orders
2:24 are going through the exchange. Okay?
2:25 Because they're also going through the
2:28 exchange. We have access to more
2:29 information. So if you're a trader
2:31 trading on a centralized exchange, you
2:33 have access to things like true volume,
2:36 right? You have access to things like
2:37 orderflow, which means you can access
2:40 the footprint charts, um, heat maps, all
2:42 these other different things that come
2:44 with having everything traded in a
2:46 centralized place, right? Everything can
2:48 be recorded and you can use that to your
2:50 advantage. That's right. You'll see that
2:52 most traders that only trade technical
2:55 analysis, they trade on centralized
2:57 exchanges because they have access to
3:00 all of this data, right? is for example
3:01 things on trader on centralized
3:04 exchanges like um stocks and futures
3:05 right just to name a few. Now most
3:08 traders like I said centralized exchange
3:09 only technicals because they have all of
3:11 these other things. Now if you come over
3:13 to decentralized which means there is no
3:15 central exchange and the participants
3:17 direct I'm sorry deal directly with each
3:19 other. So basically means like this
3:20 let's say we have those four
3:22 participants from the last one. Actually
3:24 let's just draw this for the sake of it.
3:26 instead of going through a central
3:29 exchange, they go directly to the other
3:31 participant, right? They deal directly
3:33 with each other. Now, in this instance,
3:36 because we have no central exchange, we
3:38 don't have access to some of the things
3:39 that the centralized exchange does,
3:42 right? So, for example, true volume, we
3:44 don't have access to that. Now, if you
3:45 go on trading view and you go on, for
3:47 example, uh EuroUSD, right?
3:49 Decentralized for an exchange
3:51 decentralized, and you search up the
3:53 indicator volume, that is not accurate
3:55 volume. Okay, that volume is based off
3:57 ticks. So basically how many times the
3:59 candlestick is ticking. Um if it's going
4:00 up or if it's going down, just how many
4:02 ticks that candlestick in the lifespan
4:04 of that candlestick has a tick is going
4:06 to reflect on the volume indicator.
4:08 Right? So that's not very accurate and
4:10 can be very very inconsistent. Right? So
4:12 we don't have true volume. We don't have
4:13 footprint charts. We don't have order
4:14 flow. We don't have transparency. We
4:16 don't have all these things that the
4:18 centralized exchange does. So if you're
4:20 trading decentralized, you're going to
4:22 need to rely on something else. Right?
4:24 So, I've just put this um little chart
4:26 together here. You can see centralized,
4:28 yes, order book, true volume, footprint,
4:30 order flow, transparency. Then
4:33 decentralized, we don't have any of
4:35 these things, right? So, if you're
4:37 trading decentralized, you're probably
4:40 going to need something more than just
4:41 the candlesticks, right? And what is
4:43 that? That is the fundamentals. This
4:45 moves absolutely everything. Okay, the
4:48 fundamentals are absolutely fundamental.
4:50 The most important thing in trading in
4:52 my opinion, right? Because this moves
4:55 absolutely everything. The news, the the
4:57 geopolitics, central bank speakers, the
4:59 market reacts to new thing. It reacts to
5:03 news. Literally news, right? The word
5:05 here, new. The market wants new
5:07 information. The market moves because
5:09 it's trying to price certain things in.
5:11 So, for example, let's say that you tell
5:12 someone something they already know.
5:13 They're probably not going to have much
5:15 of a reaction. If you tell them
5:16 something that they don't know, they're
5:18 probably going to have a reaction. Right
5:19 now, if you tell someone something that
5:20 they don't know that is absolutely
5:22 insane, they're probably going to have a
5:24 pretty insane reaction. And it's the
5:26 same thing with the markets, right? If
5:28 the markets already know something,
5:30 they're not going to react. If they
5:31 don't know it and it's a really big
5:33 deal, well, the markets are going to
5:34 move like crazy, right? That's why if
5:36 you have a crazy news release, the
5:37 markets are going to move like crazy
5:39 because it's new and they didn't expect
5:42 it. Now, this is just basically the most
5:43 important thing that you need to learn,
5:45 right? For some reason, no one talks
5:47 about this. I don't know why because
5:49 like I to be honest I just don't know
5:50 because this is like like I said the
5:52 most fundamental thing in trading. So
5:54 I'm going to go over a trade that I took
5:56 and basically break down everything how
5:57 I thought about it and it's going to be
5:59 really informative trying to make it as
6:01 informative as I can as much value as I
6:02 can. So let's get into section two.
6:05 Okay. So section two this is exactly how
6:07 I caught this trade here on AUDUSD and
6:10 it was taken based off the RBA interest
6:12 rate decision. So first we have to start
6:14 off with what actually are interest
6:16 rates. Right? So interest rates in the
6:17 simplest way you can put it are just the
6:20 cost of borrowing money. Right? When the
6:22 interest rates go up, the cost of
6:23 borrowing is going to be more expensive.
6:25 When it goes down, the cost of borrowing
6:26 is going to be less expensive. Right?
6:28 Very straightforward, very easy. Now,
6:30 why do central banks change their
6:32 interest rates? Right? What does it do?
6:34 What's what's what's it for? Right? Now,
6:36 the main reason central banks change
6:38 their interest rates is to control
6:40 inflation. Right? Now, the key word here
6:41 is inflation. inflation. If you're
6:43 trading currency specifically as well,
6:46 it is super super important. So, how do
6:48 interest rates even impact inflation?
6:51 Now, let's get to this. So, let's say
6:53 here that we have our pretend economy,
6:55 our little kind of civilization in here,
6:57 right? And in this economy, the
6:58 inflation is getting a little bit out of
7:00 control. So, what the Reserve Bank of
7:03 this economy does is they decide to hike
7:05 rates. Now, what this is going to do is
7:07 it's going to make mortgage repayments
7:08 more expensive, going to make credit
7:10 card interest rates higher. It's going
7:12 to make business loans more expensive.
7:13 It's going to give the currency
7:16 strength. And it's going to lower
7:17 consumer confidence. Right? Now, what
7:19 all these things are going to do is it's
7:23 going to make people of this economy
7:25 spend less money. Right? So, it's going
7:26 to spend less and what it's going to do
7:30 is it's going to slow down the um the
7:31 economy, right? It's going to slow
7:33 everything down. Inflation is getting
7:34 too high. Let's just slow it down, hike
7:36 everything, make it expensive, and let's
7:38 slow things down, right? What this is
7:40 going to do is it's going to cool off
7:42 spending, right? Cool down spending.
7:44 Now, when spending cools down, that is
7:47 going to cause inflation to lower,
7:49 right? Now, on the flip side, let's say
7:52 this economy um has had rates quite high
7:53 for a certain amount of time, right?
7:55 They feel like they've had a tackle on
7:57 inflation. Now, one of the things that I
7:58 was saying just in the previous slide is
8:00 that when you have rates high, it's
8:02 going to slow down the economy, right?
8:04 And you cannot have the economy slow
8:06 down too much. Otherwise, it's going to
8:08 cause uh you know some serious serious
8:10 problems, right? So, let's say they've
8:12 had to tackle an inflation and now they
8:14 need to cut rates to stimulate the
8:16 economy, right? So, when they cut rates,
8:18 mortgage repayments lower, credit card
8:20 interest rates lower, business loans
8:21 lower, and the currency is going to
8:24 weaken and the consumer confidence is
8:26 going to go up. Right? Now, what this is
8:28 going to do is it's going to encourage
8:30 people to start spending. Business loans
8:31 are cheaper. Business is going to start
8:32 expanding. They're going to hire new
8:33 people. They're going to do this. Right?
8:35 and the currency strength is going to
8:36 lower. Right? So basically what this
8:39 does stimulate the economy, right? So if
8:41 you're a central bank that you have to
8:42 kind of weigh all these different things
8:44 in play when changing interest rates,
8:45 right? If you put interest rates really
8:47 high, yes, you're going to not have
8:49 barely any inflation and you can combat
8:50 inflation really quickly, but it's going
8:54 to put serious pressure on the people in
8:56 that economy. So why does the currency
8:58 strengthen or weaken? Right? This is
8:59 what we want to know because this is how
9:01 we can trade it. So for a general rule
9:04 of thumb, if the Reserve Bank hikes
9:06 interest rates, that currency is most
9:07 likely going to gain strength. Just like
9:10 I said before, and then if they drop
9:11 interest rates, the currency is most
9:13 likely going to weaken. Now, I put here
9:14 for the most part because there are
9:17 exceptions to this. I'm not going to go
9:18 through it in this video because it'll
9:19 make this video way too long, but this
9:22 is just for the most part just to keep
9:24 it nice and manageable, right? Why does
9:26 the currency gain strength? So let's say
9:28 in this case, we have the RBA. They have
9:30 just raised interest rates, right? What
9:32 that's going to cause bonds. You're
9:34 going to make more money from bonds.
9:36 Term deposit. They're going to pay more.
9:38 Cash holdings. The interest rates are
9:40 going to increase. So, what's this going
9:43 to do? Foreign investors are going to
9:45 come in and start putting money in the
9:46 Australian dollar because they're going
9:48 to get more out of the Australian
9:50 dollar, right? And then that's going to
9:53 cause Australian dollar strength, right?
9:54 The flip side, if you have the RBA
9:56 lowers interest rates, it's going to do
9:58 the opposite. the bonds, term deposits,
9:59 and cash holdings. And there are many,
10:01 many other things like, you know, bond
10:03 yields and capital flows and all the
10:04 other things, but I'm not going to go
10:06 through that, right? So, just for the
10:07 most part, we got these three here. And
10:09 then what's it going to do? It's going
10:11 to not really spook off, but investors
10:13 are going to leave. Okay, maybe this
10:14 guy's a little bit too scared, but
10:15 basically, investors are going to think
10:17 about putting their money elsewhere
10:18 because they're not going to get that
10:20 high of a return if they put their money
10:22 in the Australian dollar. Right? So, now
10:24 to the um AUDUSD trade breakdown, right?
10:26 So, we've got that out of the way.
10:28 That's kind of the basics of interest
10:30 rates, how it works, what I'm what I'm
10:31 kind of thinking of, right? Obviously,
10:33 it's very very simple. I'm leaving, you
10:35 know, many many things out. But that's
10:37 just to keep it kind of manageable and
10:39 easy to watch. Right? So, the first
10:41 thing that I want to think about um
10:43 leading into this print is am I going to
10:44 see a hike? Am I going to see a cut? Or
10:47 am I going to see a hold? Right now,
10:49 what I want to see for this print was a
10:52 cut. The reason I was expecting to see a
10:54 cut is because, like I said, I don't
10:55 really want to go too in depth here
10:57 because I could, you know, talk about
10:59 this for a long time. But basically, we
11:01 had the big world event that made
11:04 everyone get quite sick. Um, all the
11:06 central banks started hiking rates after
11:07 a while because they needed to combat
11:09 inflation. As you can see right here,
11:11 this is the um, RBA. They held rates the
11:13 same for quite a while around this area.
11:15 they were a little unsure about what's
11:16 going to happen if they had a tackle on
11:18 inflation if their rates were high
11:20 enough to actually tackle inflation.
11:22 Then through here they said okay maybe
11:23 we're getting towards there and they cut
11:25 rates and then this is right here the
11:28 rate decision that I traded. Okay so
11:31 what I'm expecting is a cut. The reason
11:34 that I took a sell here because you may
11:36 be thinking before in the first section
11:38 I said that if the markets are already
11:39 expecting something and that thing
11:42 happens well nothing's really going to
11:44 happen right the markets aren't really
11:46 going to react. Now the reason that I
11:49 did take this trade was because of this
11:52 CPI print before the rate decision.
11:55 Okay, so CPI right here, as I said, is a
11:57 leading indicator of inflation. And
11:59 right here in these little um arrows,
12:03 this displays the last um CPI prints
12:05 leading up before the rate decision.
12:07 Okay, so we had as expected, lower than
12:09 expected, lower than expected, and then
12:11 right before the rate decision, we had a
12:13 CPI print come out higher than expected.
12:15 Now, if this was lower than expected, I
12:17 probably wouldn't have traded this print
12:20 because it is so clear that we are going
12:22 to get a cut, right? If the CPI is
12:24 coming in lower back to back, then most
12:26 likely we're going to see a cut and the
12:27 market's already expecting it. So, not
12:29 much of a reaction is going to happen.
12:30 It's like, okay, well, of course, this
12:33 happened, right? But this right, this is
12:35 the print right here. You see come out
12:37 higher than expected. This is almost be.
12:39 So, as you can see, it's come out before
12:41 and it's almost said, okay, hold on. Few
12:43 analysts were thinking before it was
12:44 like, okay, completely, completely
12:45 completely is going to be a cut. But
12:47 then we saw this green print and it's
12:49 like, hold on. Obviously, it's still
12:51 going to be a cut like most likely, but
12:53 it just leaves the d the um the door a
12:56 jar open to say, "Hold on, maybe
12:58 something could happen here, right? It's
13:00 super super small chance, but there is a
13:03 chance now, right?" So, basically,
13:05 that's what I wanted to um trade. I
13:08 wanted to I was still expecting a cut,
13:11 but because we had the CPI print come
13:13 out higher than expected um just before
13:14 the rate decision, like the closest one
13:16 before the rate decision, I was
13:17 expecting, you know, we could actually
13:20 see some weakness come in from here,
13:22 right? So, like I said, what I'm
13:25 expecting is a cut. If we got a hike, I
13:28 would have seen expected to see ab super
13:30 aggressive um strength. If we're to see
13:32 a hold, I would see expect to see
13:33 strength as well, but not as much
13:35 strength as a hike. But mainly what I
13:38 want to see is a cut, right? And a cut
13:41 by 0.25 basis points. That is what it's
13:42 expect. If it cut by more, we would have
13:45 got much more aggressive weakness. But
13:47 um what I'm expecting point god that's a
13:50 terrible two.25 basis cut. For that,
13:52 let's get into the charts to show you
13:54 how I actually enter this trade. Okay,
13:56 so we're on the charts. Let's break down
13:58 exactly how I enter this trade. So the
14:00 first thing I'm doing is I am coming up
14:02 to either the 1 hour or the 4 hour. In
14:04 this case, I'm up to the 1 hour, right?
14:06 And I'm going to mark off the most
14:08 significant key levels, right? I want
14:09 this to be as simple as possible. And I
14:11 want the levels to be so significant
14:13 that you can almost see them without
14:15 having to draw the lines, right? So for
14:17 example, if I get rid of this line here,
14:18 level, um, you can see that you can
14:20 almost eye a level, right? You can
14:22 almost see it without having to draw the
14:23 level onto it. Okay? So that's what I
14:25 want. Super simple. I'm not really going
14:26 to rate this down much because it's just
14:28 yeah, super simple. Right after that,
14:30 I'm coming down to either the five or
14:33 the 15 minute. And why is my computer
14:36 frozen? Did I just spend five grand on a
14:38 computer that freezes? Nope. Okay, we're
14:41 back on. So, what I want to see is a
14:44 range, right? That's the ideally a
14:45 perfect little range that we could break
14:47 out of and then enter because remember,
14:49 I want to see the fundamental bias Y and
14:51 then I want to have my technical entry
14:54 when. Okay. So, if I'm skipping a few
15:01 just before the print, here we go. We
15:02 can see that we're actually forming
15:05 quite a nice small little range, right?
15:07 This is perfect, right? Because I know
15:09 that we can break out of this range if
15:10 we get the cut in rates. We're going to
15:12 get that Australian dollar weakness come
15:14 in and I'll be able to take a sell right
15:16 here. So, what actually happened? Of
15:19 course, as you may already know,
15:21 weakness came in. We got that rate cut
15:24 just as expected. Right now, this trade
15:26 looks like it uh happened very quickly,
15:27 but actually the first few seconds it
15:30 moved extremely slowly, right? And this
15:31 actually caught me a little bit off
15:33 guard because as you can see, I didn't
15:34 enter as it broke structure. I almost
15:37 Let me just zoom in here. I entered
15:39 before it broke structure, right? So, I
15:42 make mistakes, too. I'm human. Ideally,
15:43 I would have wanted to enter here,
15:44 obviously, as we're breaking this
15:46 structure, but I got a bit of ahead of
15:48 myself because I was expecting it to
15:50 move so fast. So I entered a little
15:52 early but nevertheless it played out
15:54 right. So for me personally I would have
15:55 to you know make sure I don't do that
15:57 again. Right now in terms of my stop
15:59 loss I'm placing my stop loss above the
16:01 impulse. Now usually I would place my
16:03 stop loss above the range. But in this
16:05 case I was so confident that I wanted to
16:08 see um Australian dollar weakness from
16:11 this print um that if I saw any strength
16:12 at all I didn't really want to enter the
16:13 trade, right? Because it's something
16:14 maybe that I haven't been paying
16:15 attention to. Something's come up. So I
16:17 just want to be out straight away. So if
16:19 I come over here, this is just the
16:20 spreads. This is the value of the
16:22 Australian dollar. We can see at 230 we
16:24 get that immediate strength come in
16:26 straight off the print. Right? So AUD/USD
16:28 AUD/USD
16:29 I'm entering. Like I said, entered a bit
16:31 early but that is fine. Now if we skip a
16:37 bang. So what I'm doing is I'm going to
16:39 target my key levels that I've set. For
16:41 example, if I were to be a buy, this
16:43 would be my take profit for here and
16:44 this would be my take profit for a sell.
16:48 Right? So, I want to take off 75% of my
16:50 position at one of these key levels.
16:51 Right? As you can see here, this green
16:54 line, that signals me taking 75% of my
16:55 position. After that, I'm going to move
16:58 my stop loss to break even. And then I'm
16:59 going to let the trade run to see if I
17:02 can catch a runner after um trading my
17:04 stop loss. Right? So, for example, we
17:08 come back up.
17:10 Now, also at 3:30, an hour after the
17:12 print, we have the press conference.
17:14 Right? So, it's always a bit sketchy
17:16 trading in the press conference because,
17:18 you know, Michelle Bullock, which is the
17:19 the head of the RBA, she can say one
17:21 thing, she can say the other thing and
17:22 make price move kind of everywhere. So,
17:24 I really tried to avoid trading
17:26 speeches. Um, in this case, yeah, I
17:27 wasn't entered. I was entered in the
17:29 trade, but I don't like to actually be
17:31 entering while the speech is happening.
17:33 So, basically, I didn't really say
17:34 anything crazy. I do have this one thing
17:36 here. It says that the board assesses
17:38 that this move will make monetary policy
17:39 somewhat less restrictive. it
17:41 nevertheless remains cautious about the
17:43 outlook particularly given the
17:44 heightened level of uncertainty about
17:47 both aggregate demand and supply right
17:48 so basically what the markets already
17:50 know so now the markets most are going
17:52 to continue
17:54 with some of that bearish pressure right
17:56 so as we break structure I'm moving my
17:59 stop loss quite aggressively here and as
18:02 you can see if I skip forward I move my
18:03 stop loss aggressively aggressively and
18:07 then it just takes me out right here so
18:10 75% of my position taken out here and
18:12 then about 25% of that position is taken
18:14 out right here. So that's the trade. As
18:17 you say, technicals quite simple. The
18:19 importance of the fundamentals basically
18:20 made this whole trade. It's the
18:22 fundamentals that give you the reason
18:24 why. And it's the technicals that give
18:25 you the reason when, right? You put them
18:27 together, everything starts to make
18:29 sense. So if you have any questions,
18:30 anything you want to ask, drop it in the
18:32 comments. Happy to answer. And I will
