Successful trading is not about predicting markets or mastering technical analysis alone, but about developing a robust, disciplined trading process that integrates self-awareness, risk management, psychology, and a systematic approach to strategy development and execution.
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Welcome to a new episode of the Incilico
Terminal podcast. Today I have with me
Trader XO and we have a bit of a
different setup this time. A bit more of
a professional setup I guess. But uh I
guess first for people that don't know
you could you introduce yourself, who
you are, what you do, what do you have
for us today?
>> Yeah, sure. So I'm trade fairly pseudo
anonymous. Uh I've been in the trading
space since 2016 when I first bought
Bitcoin. Um, you know, ever since 2017,
I've been actively trading the markets.
I've been through the highs, I've been
through the lows, all the emotions
associated to trading. But, uh, I have
to say, you know, looking back, next
year is going to be my 10th year. It's
been one hell of a journey.
>> Uh, I'd recommend anybody who's looking
to start out, keep well away from
trading. Now, but, you know, it's just
such a a mental, emotional toll more
than anything, and it can really wreck
havoc on your on your lifestyle. But you
know, we'll talk about that in the
stream today. But I think at the end of
the at the end of the day, at the end of
the day, um I think if you're truly
committed to the game, then you can have
a lot of success as well. Uh prior to
that, I come from a tech background. You
know, I graduated in computer science
with mathematics and I mastered with
computer science with cyber security,
worked in investment banking as a
software developer for 10 to 12 years.
um you know and um decided to step away
you know like I said I bought Bitcoin in
2016 started trading in 2017 made a lot
of money lost a lot of money went back
to work because I I sucked at trading
for for a while and then finally sat
down and um it was in late 2018 after
you know losing a lot of money in the
bare market that I started to figure out
in building a trading process which
really laid the foundation of of kind of
where I am today. >> Mhm.
Yeah, sounds good. So, what do you what
do you have prepared for us today? The
first real prepared guest.
>> Yeah. So, I think so I think for me uh
as opposed to just having a a podcast
about me me and how great I am and how
[ __ ] I am or whatever it is. It's just
basically about well look why don't we
do something different? Um and and I
think it's more about sharing my journey
in trading but really giving back to the
community as to where or what I've
incorporated that I hope you know can
inspire somebody else to to follow a
similar path or find today's uh stream
useful. Um, and that is the trading
process. And I think like I said, you
know, having entered the space in 2017,
I've I've wrote about it on my Substack.
Uh, you know, I made a lot of money and
a lot of it was down to luck. You know,
it was a bull market. Everybody's a
genius in a bull market. But when [ __ ]
hits the fan and you have no
understanding of risk management, you
have a lot of emotional attachment to
your, you know, whatever your assets
you're in, uh, you've got a heavy
emotional bias for them to perform well.
Anybody who talks badly about Bitcoin
going down is ridiculed. And I was one
of those people. I was an absolute
permable, you know, um, very emotional
about my trading. um to the point where
I I lost a lot of money thankfully um
you know it wasn't it wasn't I didn't
lose my initial I kind of doubled my
initial at the end of it when I stopped
trading in 2018 and that was it at the
end of October you know I sat down after
losing some money in leverage trading as
well you know on BitMX I've got some
Bitcoin in the insurance fund but um sat
down and decided I need to stop doing
what I'm doing because whatever I do I I
can make a little bit money but that I'm
taking some really large losses and uh I
I don't know if this is this is the
career path for me but let me be really
structured. Let me really think about
how to approach this game as a
professional u and discard everything
that I've learned or I've understood
about markets because a lot of my
performance prior to that was just
randomization. It was just pure look. It
was just pure fundamental analysis.
Everything was going up. So you could
kind of throw a dart to dart board
blindfolded and kind of hit jackpot.
That that's how markets were in for for
the best part in 2017. And so you know
in today's session I wanted to talk about
about
the importance of a trading process and
why for me it was kind of the the
defining point and it's it's everything
that I've built upon year after year
after year which is has got me to where
I am today. And and what I'm excited
about the most is is not where I am
today as a trader. It's knowing how much
more potential and how much more I can
get out of my game in the next three,
four, five years where each year on year
I look at my performance and I I just
feel as though I'm getting better and
better and better as a trader and I'm
becoming more I'm becoming more humble,
more uh objective in my thought process.
Whereas it's very easy for traders to to
marry a bias and lean towards
predictability as opposed to
appreciating the random nature of the
market. And we can't control the market.
We can't really uh predict what the
market is going to do. Uh but it's more
about understanding who you are as a
trader, understanding your edges as a
trader. But ultimately um
>> you know I I think I think I said it
before that a lot of new traders anchor
that their trading around learning the
technicals whether it's price action
whether it's Elliot ways whether it's
orderflow footprints the dawn the ladder
a bit of fundamental analysis unfortunately
unfortunately
I've been through that same journey and
and I can tell you it's it's not the be
all or end all of trading it's just a
small subset or a small segment of what
you require ire to succeed in this game
as a discretionary trader.
>> And so the the reality of trading is
such that over 80 to 90% of traders
fail. Um and it's rarely due to a poor
strategy. I could give you my strategy,
somebody could give me their best
performing strategy, but the chances are
if I don't have a process, if I don't
have a routine, a structure, if I don't
understand risk management, then the
chances are I'm probably going to lose a
lot of money very quickly. And because
of that, you know, the statement that
I've put here, more often they blow up
because they don't manage risk. It's not
the market that takes them out. It's
often themselves. And we saw that on 10
10 in 10th of October.
>> How many traders did we see obviously
anonymously on Hyperlquid just blowing
up across the board. You know, the the
liquidations were brutal on that day.
And and what does that come down to? Was
it their strategy or was it really
themselves, their risk management, their
emotional bias, their emotional
attachment to their positions and not
recognizing the risk in the markets once
price started rolling over, you know?
So, it's it's it's unfortunate, but the
reality is that 80 to 90% of traders fail.
fail. >> Mhm.
>> Mhm.
>> And so, when you're in this game, you
really have to ask a question, well,
what are the 80 to 90% doing that's
causing them to fail? A and in this game
when I refer back to the book by Tom
Hugard best loser wins and he states how
normal thinking does not win in this
game of trading you really have to think
differently and approach the the entire
game of trading differently to what the
majority do and if you think about
parto's principles or prito's law 80/20
80% of traders fail 20% make money and
even as a as a as a trader as a
discretionary trader the bulk of your
money in a year probably comes from 20%
of your best trades. The other 80% is
just you churning away, churning away,
churning away, going sideways, going
down, then slightly up until you hit,
you know, a couple of very good
asymmetric plays. So that's the reality
>> of of of trading failure. And and one of
the reasons why I feel uh traders fail
is because we don't understand markets.
You know, markets are unpredictable. Um
but we can learn to understand them. No
one can can predict market moves with
certainty. And I think that's a common
flaw that many traders try to do. We we
all marry a bias. We've all got arrows
pointing towards the chart that no price
is going to do this. There's no chance
price is going to drop, you know, to
whatever level lower down.
>> Um, and that's not really objective.
Anything can happen at any time. And we
saw that. Again, I keep talking about
October the 10th, 2025 across crypto. I
I've pretty much lived through every
major cascading liquidation events uh
since 2017
and Touchwood I've survived everyone
since 2019 because for me I it's
understanding that at any point the
market can do anything. All it takes is
one bad day for me to be wiped out on my
trading balance or my trading account as
opposed to all the other days where I've
done really well. I've grown my can be.
It's just that one day and it comes down
to survival. And some of the risks in
the market are global events, war,
policy changes, economic shifts. We saw
what happened with the COVID crash. You
know, the market breaks out, it has
forced liquidations if liquidity is very
thin or cascading liquidations on the
way down, which we saw. Um, another and
and and then you've got external risk
factors such as exchange hacks,
financial system shocks, interest rate
decisions. And so there's always a level
of risk in the market and markets do not
like uncertainty. And at any one point
as soon as there's a high level of
uncertainty in the market that there's
likelihood of of of a a risk event, but
with that risk event, if you can read it
and if you can play it correctly, you
can capitalize on that. >> Mhm.
>> Mhm.
>> And so it's about embracing uncertainty.
You know, even the best analysis or
setup can be disrupted by unexpected
events. market moves are unpredictable.
Uh, and there's a high degree of
randomness. And so, what I've learned
over the years is just be humble, be open-minded,
open-minded,
>> and and and and stop speaking in
absolutes. The minute you start doing
that, and you start becoming more
objective about the markets, you then
appreciate that this game is all about
survival, risk management first, risk,
risk, risk, and then you can think about
taking the trade. But the mindset has to
be there is is is constantly questioning
where is the risk in the market that's
going to cause me to be offside. Whether
you're long, whether you're short, where
is that evolving risk likely to occur
and where or why, what are those
drivers? But you have to be balanced
because obviously if if you're too
hesitant, then you're going to fail
taking risk and your primary job is a
risk taker, but in a calculated way. And
that's kind of where you have to embrace randomness.
randomness.
Um because many traders struggle because
they don't fully accept market
uncertainty, you know. Um and that leads
to stress, frustration, poor decision-m.
We've all done it. We've all oversized
or undersized. We've all hesitated on
trades. We think the market has to go in
certain way. So, we oversize and then we
get taken out. I I've been there myself
many times during, you know, 2018, 2019,
and parts of 2020. And so really a lot
of this trading decision-m comes down to
emotion. It's not a systematic way of
trading. It's emotionally dread
emotionally led which causes a a dreaded
reaction in in your performance
>> which then gives this negative feedback
loop that you you're perpetually in this
loop of failure because your
>> your trading is wrecked by what you
think is technical decision-m isn't.
It's actually overridden by a level of
emotional uh hacking of your performance
and of your game which is impulsively
causing you to make bad decisions from
oversizing to cutting the trade too
early due to a lack of fear. Um you know
so so there are various factors that we
have to think about and and the key to
all of this is just appreciating the the randomness
randomness
>> in the market. So you know that that's
the power of objectivity. I talked about
objectivity earlier. um is accepting
that you know uncertainty reduces
stress, fear and emotional attachment
and staying objective allows you to see
the market clearly without a bad bias.
You know over the last 2 3 years now I
really don't care whether the price of
Bitcoin is going up or going down. All
I'm looking for is long opportunities at
key inflection points and short
opportunities. That does not make me
bearish or bullish. Price could be in a
downtrend and I could still be looking
for longs at key support. Price could be
rallying and I'm looking to hedge out.
Does that make me bearish? Not
necessarily. I'm just objectively
thinking about the the riskto-reward
profile for me as a trader for my
system, for my performance and who I am
and my personality. So the market isn't
personal. It simply moves. >> Yeah.
>> Yeah.
>> And your job is to is to respond and and
not to predict. So
I've highlighted objectiv objectivity.
Embrace this mindset. >> Mhm.
>> Mhm.
>> And so what is the truth about trading?
When when you ask traders out there,
what is trading really about? And you'll
be surprised, including myself, if
somebody asked me this question back in
2017, 2018, what is trading? You know,
ultimately what does it come down to?
And it's all under the umbrella of expectancy.
expectancy.
Expectancy is your win rate multiplied
by your average win minus your loss rate
times by your average loss.
>> And what is edge? What what is edge?
Edge is having positive expectancy. And
if you don't have an expectancy greater
than zero, then you do not have a
profitable system. If your expectancy is
just above zero, then you do have a
slight edge and you can work on refining
that edge to enhance that performance to
enhance that um you know edge and and to
increase your expectancy and and a lot
of people attest expectancy to a trading
strategy. It's not just about a trading
strategy. The trading strategy is just
one part which we'll cover in today's
stream as to a a a series of subm
modules in what I like to call the
trading blueprint or the trading
framework or the process.
>> Um and and that's what trading comes
down to. It's about do you have edge? Do
you have positive expectancy? Everything
else is irrelevant. It's all about
expectancy at the end of the day. Um and
and so then it comes down to well what
is edge? Well, edge is your ability to
read the environmental market context.
It's your speed of understanding. It's
your discipline, your risk control, your
pattern recognition, your ability to
stay objective. That's that's what
defines edge for me. When I think about
all the things that develop edge and
even when we look at today, you know,
we've got the advancements of GPTs and
LLMs, informationational edge feeds into
the overall edge of you as a trader. How
are you taking advantage of that
technology? Are you using indicators?
Are you using custom scripts that you've
built yourself? Are you building
screeners and and and scanners? Because
how often, right, as traders when we
begin, we're looking for opportunities
all over the place. Well, if you've got
a very good screener and a very good
filter for one of your strategies, now
all of a sudden you're not trying to
find what the next trade is, those
trades are coming to you.
>> And so therefore, that is a level of
edge. thatformational edge. you then
have in front of you what is a set of
uh assets or markets that you can decide
all right you know what according to the
rules that I've defined on my filter or
scanner this could be a very good trade
for me because it aligns because I've
built this scanner on filter system for
this strategy and then with that you've
got other scanners and filters rule base
which are are aligned to the various
strategies that you deploy that you wish
to trade in a given context as well. So
that's what understanding edge is for
me. Um and so when I talk about my past
journey where I was as a trader in 2016,
2017, 2018, 2019, this was me on the
left. And it wasn't until, like I said,
I stopped trading. There was a period
where I I stopped trading. I didn't take
any trades for 3 months. I sat down and
I I I built a trading manual. And that
was really difficult for me to do
because you really start questioning who
you are. You learn. so much about
yourself and there are questions that
you ask. What are your strengths? What
are your weaknesses? What are you
looking to achieve from the market? What
what are your objectives? What's your
daily goal? What's your weekly goal?
What's your monthly goal? What's your
yearly goal? What's your daily routine
look like? What does your weekly routine
look like? What does your monthly
routine look like? And so all of a
sudden you start realizing that whereas
before you'd come to the desk, you come
to the chart, mark out a few levels, you
don't even think about position sizing
or do you know what? I'm just going to
whack some money onto this trade. You
don't even think about risk. You don't
even think about where you're
invalidated. And so basically all all
you're doing and and I think I've
mentioned this in the past is that
>> everybody can trade, but not everybody
is a trader. >> Yeah.
>> Yeah.
>> Right. And and I've attested to this
like you can put put on a pair of boxing
gloves and you step into a boxing ring,
you're boxing, but are you really a
boxer? Because you don't have the skill
set, you don't have the discipline,
you're not doing the bag work, you're
not doing the rounds. And and so when
you understand and accept that well
trading really is a form of professional sport
sport
and that's one way to look at it because
which in the which other industry or
career path out there and and I've
talked about professional sports MMA.
You cannot go to an you can't go to an
an MMA gym and spend six months there
and expect to fight in the UFC against
pro elite level fighters. You're going
to get knocked the [ __ ] out.
So why is it any different with trading?
You know, just remember that here's a
market that it's easy to get some money,
deposit onto an exchange. The minute you
are about to trade, just know that you
are competing against some of the best
algorithms, some some of the best
systematic traders, some of the best
funds, some of the best discretionary
traders. Do you really think you've got
a chance to outperform some of the best
in this game
>> day in day out, week in week out, month
in month out, year after year after
year? Or is the likelihood that they're
just going to come take your money away
from you and then you're probably going
to be depressed thereafter and you
probably quit trading. And that's the
reality. Until you accept that
this is what it actually is, this is
what you're doing. you are entering in
an arena which is a level playing field
for all and you're up against some of
the best. And so that's why I I come
back to the start. Why is it that 80 to
90% of traders fail? Well, because
normal thinking and and having a normal
approach to trading does not work. And
that's that's the wakeup call. That's
reality. If you're not going to do
anything about it, then don't [ __ ]
waste your time. You're going to [ __ ]
up. You're going to blow out just like I
did. just like how many others before me
have done and those who have come after
me they probably experienced similar
losses and that's just the reality. This
this is a very ruthless game. Uh but you
if you approach it with a level of
structure, discipline, process,
understanding every facet of of of
discretionary trading then you give
yourself a decent probability that you
have to find where you have edge and
that takes time.
>> That really takes time. And so what I
came to to develop over the years and
what I've come to understand was was the
trading process. And for me, these are
the core segments of everything that I
do today, which has incrementally
evolved over the years since 2018. So
what is that? It's about understanding
yourself. Then you've got the psychology
and the mindset of trading because like
I said, how often do we see the psych
the psychological aspects of trading really
really
harm the way we trade? You know, how
often do we see traders revenge trade?
They take a few losses, they're going to
oversize because they're trying to make
it back on the next trade. Or a trader
has taken three, four losses in a row,
they're down six, seven, eight% on their
account. And now when the next A+ trade
comes staring at them, they've unders
sized or they failed to pull the
trigger. That that's that's not good
trading. And and that unders sizing or
you failing to pull the trigger even
though the setup was screaming at you is
is is not because
of your strategy, but simply because the
the emotional side of trading is is is
damaging your performance. And
we then talk about routine and goal
setting which I'll I'll cover some of
these segments in today's streamer. And
then the kind of a high level I'll go
over each in higher level detail. The
one that I'll skip is technical
proficiency because I think that's more
you know subjective to technical
analysis order flow reading the market. >> Yeah.
>> Yeah.
>> And we'll finish off with uh strategy
testing. But but ultimately this these
are the segments that I think is that if
you just take remove one segment from
out of here. I think it affects your
trading. It certainly does with mine. Um
if you don't journal then how are you
ever going to evolve as a trader? You
don't know what your performance is
like. So how are you ever going to
perform really well? And I liken it to,
you know, if you're bodybuilding and
you're you're into aesthetics, right?
You are going to follow a very strict
routine. You're going to eat at this
time. These are your macros. These are
your macros. These are This is your
calorific intake. These are the workouts
that you're going to do today. You
journal it how much you lifted. And
you're looking for that week on week
progress. One day is not going to def is
going to define your body. But a
thousand days in the gym over a period
of 3 years, you're going to see drastic
changes if you stick to your routine, if
you stick to your process. When you come
off your process, fine, there's going to
be a good day. You come off your
process, you know, it's not going to
make too much of a difference. And that
happens as a trader. You'll never be on
your process 100% all the time, but
you've got to recognize that like you
have a cheat day. Oh [ __ ] this was bad
trading. I fell off my process. I need
to get back on it. Let me review. So
each segment
is ever so important. It's it's
understanding yourself. You know, if you
don't know why you're trading or what
what your objectives are, then why are
you in the game? What? Because you want
to make a lot of money? Well, yeah, no
[ __ ] We all want to make a lot of
money. But it's about really
understanding who you are and what your
strengths are, what your weakness are.
Are you a scalper, swing trader, day
trader, but why
>> why are you a scalper? What makes you a
good scalper? How do you know you're not
actually a good positional trader? Um
so, you know, we we'll talk about each
one of these and and ultimately
mastering the process is is about
mastering yourself. you know, um it's a
refined process and you can't expect to
just come out with a process one year
and and and be absolute brilliant in the
market. You've just got to respect the
fact that
>> it takes time to develop. Um
>> you you really have to approach the game
as a professional. Even though you're a
retail trader, which many of us are,
we're discretionary traders, it takes
time to develop. And I liken it to a
university degree. you know we've both
done computer science
>> we've spent 3 to four years at
university um we've done various modules
but after doing all the modules is it
only at the end that we decide I want to
become a software engineer I want to
become a database administrator I want
to become a network engineer I want to
become a cyber security specialist yet
all the other modules that you did at
university some of them may have
relevance others probably won't and I
feel that's how trading is that you.
There's no way that you can understand
yourself, experience all the psychology
aspects, understand what a routine looks
like, risk management, technical
proficiency, developing various
strategies, creating a playbook, having
trade execution, and then understanding
journaling in the space of 6 to 12
months. I just think it's a very very
tough feat
>> unless you are under the guidance of a
professional trading firm with some
professional traders and it kind of
speed speeds up your learning curve but
quite often we don't have access or the
luxury to prop firms or trading at a
hedge fund or training at a desk as a
proprietary trader. So really it takes
time to develop all these various skill
sets and it's really all these skill
sets that you're developing. It's you
that you're trying to develop as an
individual more than anything. So,
>> you know, every every segment every
segment builds towards developing your
edge. And that's why if you miss one or
two up, I I think you're just setting
yourself up for failure. Yeah.
>> Um and it's your your ability to read
price, rhythm, flow is a direct result
of your process, right? You can read the
market. Everybody's a great analyst,
right? On Twitter, we see everybody
marking order uh order blocks, supplier,
demand. Oh, look. I called it. I nailed
it. Well, how much risk did you put on
that trade? How did you size up for that
trade? Um, what was your execution?
Execution trigger. How did you just
scale into that trade? Did you limit
chase? Did you T-wap? Or was it just
randomness? You just thought, "Oh, [ __ ]
it. I'm just going to slam hit hit the
buy button and and let's see what
happens." You know, that's not really
You can do better than that. You know,
it's easy to fall into that trap of,
"Fuck it. Let me just smash market buy.
Let me just put some limit orders here."
Well, why are you putting those limit
orders there? what are you actually
looking for in the execution process?
Um, and we'll talk about that in in
today's uh session as well. But
ultimately, trading success comes from selfmastery,
selfmastery,
not just mastering the market. It's more
about yourself. And I just feel as
though technical proficiency,
understanding price action, order flow.
You can be a brilliant orderflow guru,
but you can't trade for [ __ ] Why is
that? May maybe because your
psychological aspects of your game is
damaging your performance. Maybe you're
a degenerate. How often do we see people
on Twitter sharing 700k P&L wins, but as
a result of that, it's come out 40% draw down.
down.
>> So, how how long or how soon is it that
it's only a matter of time before they
blow up? Because a 40 50% draw down on a
level of degeneracy, you can't repeat
that over a thousand times. And I always
say that you you can't scale up
randomness and you can't scale up high
degree a high degree level of variance
because eventually the market is going
to find you out. And and and it's not
that the market's going to find you out.
You actually it was upon yourself
because you didn't really have a a true framework
framework
>> for trading the next 1,000 trades
>> um and incrementally reviewing your
performance, which is where journaling
comes in. How do you know what your best
setups are? How do you know what time of
the day you're performing well? Um, how
do you know what you're, you know, which
setups you should be leaving out? Um, so
it really gives you a lot of structure,
I feel. So, you know, that's that's kind
of the core the core tenants of what I
think is key to a success a successful
uh discretionary trader whether it's a
day trader, intraday, intrae, positional
trader, you know, swing trader. the
these are the facets that I feel that
have helped me uh really get to the levels
levels
>> where I'm at today but it's also that
these core foundations are going to help
me propel to the next level and the
level after that as to where I'm going.
So there's a there's a logical
progression to where I want to be and as
traders every year we're always evolving
evolving we're always trying to get
better. always learning something and um
you know if you think of the hockey
stick curve that you know for the first
2 three four years you're experimenting
you're tinkering you're figuring out
various systems then eventually once you
find that there's a strategy with with a
high degree of positive expectancy
that's all you need
>> for as long as that edge keeps working
>> you have edge you've got positive
expectancy you are now able to extract
money from the market and your
performance will improve as you develop
your skill set over time. >> Mhm.
>> Mhm.
>> But I mean, so so far has has what I've
said made made sense to you essentially
with kind of the various segments in
trading and why they're why they're
really important. They all
>> complement each other.
>> Um, and so if you're looking to improve
as a trader, you've really got to have
an appreciation for each one. And like I
said, I don't I don't think you can
really truly get an appreciation of
every single facet of trading until at
least a good 2, three years. Yeah.
>> And and with that really comes a a large
level of deep learning, you know,
discovery, finding, understanding
psychology, mindset, understanding what
is routine goal setting, understanding
the various types of risk management
frameworks because within risk
management, you you also have trade execution.
execution.
>> Um, you know, with technical
proficiency, well, that's your analysis
of the market, your read of the market.
Can you read the market in real time? Do
you understand micro structure? Or maybe
you're more of a a swing trader that
relies on moving averages. Well, do you
understand every nuance of the the tools
that you are using, you know, which form
various strategies that you're looking
to trade? Uh and and then obviously you
go into strategy testing, trade
execution because once you have a
strategy, uh part of that strategy,
you've got trade execution as well. And
then all that goes into iterative
journaling. you know, do you you how you
planned the trade. Did you follow your
process of planning executing as you
intended to? Did you see the patterns of
execution? Um, and so it's it's an
iterative process, you know, and that's
just for one trade, the entire trade
life cycle. >> Mhm.
>> Mhm.
>> And then you've got to repeat that over
again and again and again. and and look
at your weaknesses, find your strengths,
remove your weaknesses or understand
your weaknesses and why that's slowing
you down in your trading or holding you back.
back.
>> Um, so that that that's why I think each
tenant here is very very core to to you
know elite trader performance.
I think you did a great job in
summarizing all of this uh what is part
of the process and like um displaying it
and talking about it in a very coherent
way. like it makes a lot of sense to me
and I think it like most of the time
people usually talk about um maybe
technical proficiency most like what
kind of tools they use or like a little
bit of risk management and like the
psychological aspect but I think you
really like nailed it down in
making all of these like a core tenant
of what it actually takes to be
successful in trading.
>> Yeah. Yeah. Thank you. Yeah, it
certainly helps and and it's just having
a level of appreciation
and it does take time. It does take
time. With some guidance, uh, you can
get there, but you've really got to dig
deep and understand each of these facets
of of trading. Um, and and so then it
comes to, like I said, understanding
yourself. I'm not going to spend too
much time here, but this is where I
created a 60page trading manual. um of
which some of these questions were what
are my strengths? What are my weaknesses?
weaknesses?
>> How do I work under pressure? Um do I
thrive in structure or do I prefer
flexibility? And and and I think it's a
it's a very fine balancing act. It's
really more about understanding you your
personality uh and and then
understanding what type of strategies or
what type of trader you wish to be, you
want to be. Um and then in terms of
psychology, Sunny, we'll talk about the
second segment which is um the second
segment which is psychology and mindset. >> Mhm.
>> Mhm.
>> I'm not going to spend too much time
with this, maybe 5 minutes, but a lot of
people say you've got to control your
emotions and I think that's a really
bad way of understanding the emotions of
trading. You can't control your emotions.
emotions.
And by controlling your emotions, you're
just basically trying to suppress what
is just going to keep surfacing time and
time and time again. >> Yeah.
>> Yeah.
>> When when it comes to understanding
trading psychology,
you've got to have a level of awareness,
self-awareness during the entire trade
process. So when you're planning a
trade, when you're mapping a trade, when
you're marking out your levels on the
chart, you'll notice that, you know,
your emotions are relatively calm. Um,
when you're going through your process
of, you know, whether you follow a
structured process of of daily morning
pre-market prep, your emotions are
fairly low. You're just planning the day
ahead. planning the possible trades
ahead. But your your emotions are
heightened when during the point of
execution. When prices come into your
level, your emotions are are generally
heightened. And if you don't have
structure in your trading, this is what
I've come to understand. If you don't
have structure in your trading where you
don't know how much you're going to
risk, you don't know what position size
are, you don't know, you don't know what
your execution trigger is, you're
blindly punting on a level. Of course,
you're going to be emotional when you
hit the trade. How often? Right, we've
probably all done this.
>> You've entered a trade, price is
reacting, it's come down, you're offside
just marginally, but you've cut the trade.
trade.
>> One hour later, price moves, it finally
takes off, left behind, and you start
juicing it.
>> Or or how often do you see when price
you've nailed the entry? Brilliant.
You're calm. You're collective. Price
pushes away.
>> Oh [ __ ] I think it's going to come back
down and stop me out.
>> Mhm. you you start you start quit the
trade because you think you might get a
better entry but price pushes up even
higher. Now was that emotionally
driven trading because if you were
looking to quit the trade that's a fear
of losing. >> Mhm.
>> Mhm.
>> The flip side to that is greed or I
think this is going to be a brilliant
level to trade. Let me really oversize. >> Mhm.
>> Mhm.
>> Or greed in the sense or revenge
trading. [ __ ] I need to make make back
some of my losses. and then you you go
on a tilt. So
really having a self level of awareness
and and and understanding that during
the point of execution, write down soon
after how you felt during the trade
execution, during the trade management.
Just get a pen and paper on a sheet and
write down your emotions for the day
whilst you're actively trading even
before you take the trade in the
morning. How do you feel? So, you've got
to have a a level of uh observational
aspects of looking at yourself as to who
you are. Um, and you know, I'm not going
to repeat some of the pointers here, but
you can see that you've got to recognize
emotions in real time. Um, it doesn't
mean that you can stop them because, uh,
emotional patterns have strong momentum. Um,
Um,
initial recognition may feel like
control, but it's just often a temporary
effect driven by novelty, not real
correction. And true change requires
more than mapping your emotions. You
need a deeper performance review.
>> Um, and you've got to you've got to
you've got to dig out your flaws. It's
like when you've got weed going through
the ground, you know, you can spray some
weed color on it. Fair enough. The the
weed might die, but it it resurfaces
again. That's a classic example of your
trading emotion. You might think you
control it. You're all right. You try to
control it. Yeah.
>> But it it resurfaces again.
The true aspect is that you have to get
down to the root cause of why is this
making me feel this way when it comes to
trade execution? Why am I suffering from
fear, from greed, from revenge? What's
causing that? And then you've got to
think about, well, if I keep doing this,
how is this going to affect me as a
trader in the long term? And then the
fourth part is all right, what do I need
to do now to stop feeling this way? And
sometimes it's it's it's as simple as
understanding risk management. All
right, for each and every trade that I'm
going to take, assuming you're on a bad
run and you risk 1% per trade, you take
six trades, you take six losses in a
row, you're down almost 6%. >> Mhm.
>> Mhm.
>> Now, if if you're suffering from trading performance
performance
psychologically and you know that your
strategy is fine, then reduce your risk
to half a percent. you take six losses
in a row, you're only going to lose less
than 3% if that. And now all of a sudden
losing 3% after six trades doesn't feel
so bad.
>> And if you're risking too much, say
you're risking 2% and you're in a six
trade losing streak, well, you're down
12%. and and and even then if you've got
poor risk management where you didn't
really respect your stop losses or the
amount that you were willing to risk,
you're going to lose 30% in a matter of
weeks because you didn't adhere to your
risk management levels. So risk
management and survival is really key
and you've got to recognize how emotions
uh can play or have a real impact on on
trading performance. And so like when
you when you think about trading
performance, you got to think about it
as a as a bell curve. Now I learned this
concept from uh the mental game of
trading a book by Jarret Tendler really
fantastic book okay
>> um that really gives you an actionable
framework to work on your trading
especially from from the mental side and
I just want to say one thing
>> that you can't just go away and think
all right I'm going to start working on
the mental game of my trading because if
you don't have a a system or a strategy
then what the [ __ ] are you working on
are you working on yourself or actually
are Are are you actually working right?
Okay, here I am as a trader. I
understand who I am. Here's a strategy
that I trade. I'm having issues trying
to execute the strategy because of the
emotional aspects. I have got some edge,
but the emotional side of trading is is
not allowing me to execute as per all my
back testing and forward testing that
I've done that in the real environment I
keep [ __ ] up. So, the strategy is
actually fine. The issue is the
emotional aspect. And so, it's it's
about digging deep into your emotional
side. And there's two sides. So you've
got your mental game of trading. Are you
confident? Are you relaxed? Are you
patient with a purpose? Being patient
and being disciplined basically means
that you are following a strategy with a
positive expectancy or a level of
positive expectancy with with an with an
edge. Uh and so like when and many
people can relate to this because when
you've got your BK and prices coming to
your level, are you hesitant? Are you
secondg guessing? Are you
>> reacting too slow, too late? Did you
fail to pull the trigger? So that is
actually not a technical issue. That's
that's an emotional state that you have
to appreciate. And then your C game is
you're just being lazy. You're
distracted. You're probably out and
about. You're trading on your mobile.
You decided to take a trade. You didn't
put a stop loss in place and you're
trading your P&L. That's just dog [ __ ]
trading. You carry on doing that for the
next two, three, four, five years.
>> You're probably going to blow up quicker
than you know it. Mhm.
>> And then you've got your tactical game,
which is is your do you understand the
current environmental context? Are you
aware of what it is that you're actually
looking for in terms of an execution
trigger? Are you letting price come to
your levels? And then you go to your B
game, which is somewhat substandard.
You're taking too many attempts on the
trade, you know, because you don't
really have a a a true execution
process. You don't have
a a repeatable process that you've back
tested, forward tested, that you've seen
play out in the market over and over and
over and over again, right? Because how
do you build
performance? How do you enhance your
performance? Just like a boxer goes to
the gym, does bag work day in day out,
>> month after day after day, week after
week, month after month. He gets the
repetitions in. He spars. He's done all
all the hard work. And now when it comes
to execution in a real fight, he's able
to perform. He's at his peak
performance. Trading is the same. If
you're looking to execute a trade, but
you don't know why you're executing a
trade or you don't know what you're
looking for, then what are you actually
doing? you you're just trading
randomness to an extent. But if you can
really nail down that, all right, this
is what I'm looking for at this level.
Here's the micro structure. Here's what
I'm looking for. It could be a shift in
micro structure. You're looking for trap
traders. You're looking for maybe a
liquidation event. You're looking for um
you know, forced sellers or force buyers.
buyers. >> Mhm.
>> Mhm.
>> That is a better reasoning to execute a
trade as opposed to, oh, look, this is a
demand zone, so I'm just going to I
think this is worth buying. I think
we're going to get reaction. I think
we're going to get reaction. You don't
know why. You don't know what you're
looking for, but you think you're going
to get a reaction. Well, that's just
guesswork. What's the probabilistic edge
of that trade execution? And I keep
talking about it. So many people talk
about, oh, look, liquidity grab under
this high or under this low. Or if
that's a liquidity grab, then why did
price roll over soon after? >> Mhm.
>> Mhm.
>> So, so, so you get the notion. It's
really understanding
what is a shift in that inflection point
in the market that is giving you a
reason to execute a trade. And that's
just one facet. That's just trade
execution. We we haven't even talked
about what type of strategy you're
trying to trade. And so, you know, we
talked about your B game is you're
quitting good entries. You're front
running entries because when you're
front run entry, you you you're then
offside. Then you puke it. Then you
think, "Oh, [ __ ] I'm actually going to
execute again." So, you've just pissed
away a small amount of your capital. You
keep doing that over and over and over
again. you're going to get capital
erosion. You're going to eat into your
P&L. You're not trading efficiently.
You're trading emotionally. Uh and then
your C game is just again dog [ __ ]
trading. You're chasing price. You're
copying other traders, right? How often
do we see people on Twitter say, "Oh,
hey, EXO, why do why don't you ever drop
any calls, but you never called it, you know?"
know?"
>> Well, what are you doing? Just think
about what you've just said.
>> You you are [ __ ] copying other
traders. You're not you're not gonna
make it. I'm sorry, but you're not gonna
make it. I've never to this day ever
copied any other trader and and and the
one time that I did was in 2017
>> and I just thought, well, this is a [ __ ]
way of trading because I don't know what
the [ __ ] I'm doing. Like, why am I
actually taking this? Because he said
so. All right, let me follow him. And
when that trade loses, oh, his [ __ ] [ __ ]
[ __ ]
So, so the minute the minute you take
you take somebody's trade and and you
and and you lose, all of a sudden that
person is crap in your eyes is well,
guess what? as good traders have a 50%
win rate. Some of the best traders in
the world have a 40% win rate.
>> Are they bad traders? No, they're not.
They just understand
the mathematics behind trading and the
probabil probabilistic nature of
trading. So, it's really about being on
your A game. Um a and the book um
mastering the mental game of trading
talks about how to evolve your A game
and your B game and your C game. when
you what you really want to be doing is
that focus on your A game and eventually
as you get better your A game then
replace replaces your B game and your B
game replaces your C game and you've got
an even more better A game. So your old
A game becomes your B game. And you've
gradually got to keep stepping forward
as a trader, making those refinements,
iterative refinements, getting better
each year, every 6 months, every year,
every two years. Eventually, where you
were 2 years ago,
say, you know, it's 2025 now, or
whatever your aame is, you should be
striving that your A game eventually
becomes at some point later in time a C game.
game.
>> Yeah. And you've got now this new elite
level of a game, which is your a a star
setups, which is your absolute brilliant
best in setups, the ones that you only
want to be taking. You don't care about
anything else because you've seen this
play out again and again and again and
again. So, it's like when I trade the
range highest in the market, I know that
there's there's very I know that when
price comes to range high, the old me in
2020 would have been, oh, range high,
execute. Oh, [ __ ] I'm offside. I'm
going to cut this here. I'm gonna wait
for it to deviate and then get back
inside. All right, exe execute again.
And guess what? Price failed to break
down. It goes even higher.
>> I've just taken two losses in a row. Yeah,
Yeah,
>> that was because I was just trading in
some zone, but I didn't really
understand what's actually happening
under the hoods. Fast forward today
where I am.
People talk about trade the reclaim,
trade the confirmation. I think that's
just a [ __ ] way of taking a trade.
I'm actually looking to execute whilst
let's just say the deviation is
developing because I'm looking at the
order flow. I'm looking at the u
positioning. I'm looking at where
whether people are forced buyers or
force sellers at a given level. And I
want to take advantage of that
inefficiency in the market.
>> What you're trying to do as a trader is
exploit inefficiencies in the market
that are repeating over and over and
over again. Once you understand what
that pattern is, what that inefficiency
is, then you've got to figure out, all
right, how can I actually take advantage
of this? Have I seen this play out not
just once, two, three times, four times,
five times, but 10, 15, 20, 30? Have I
gone back and back tested this across
various charts and Bitcoin and Ethereum
and Salana? Is this passing playing out
at the extremes of of of range highs and
range lows? Yes, it is. All right. Now,
how can I actually structure a trade
around this? you know, do I just
randomly place my stop at some level or
is there a a calculated way I can place
my stop at a given high or a low?
Because if you think about it, what is
variance? Well, we've talked about
variance in the sense where if you're
taking a trade, how often do we see
traders talk about, all right, I'm going
to take a trade here and I'm going to
place a stop above this high. >> Yeah,
>> Yeah,
>> just think about that for a moment. Look
how random that stop placement is.
because on the next 100 trades, you
can't replicate that where for each stop
low or stop high, it's going to change
each time. There's no way of quantifying that.
that.
>> So sometimes you have to think about,
you know, this is something that I've
been thinking about for the last year,
year and a half is that I'm trying to
move away from this ideology of I'm just
going to put my stop at this high and
then structure a trade around it. I
think that's just a [ __ ] way of trading.
I want more of a statistical edge, a
numerical edge, a mathematical edge
where I can say, "All right, I can take
the day's ATR range and I can place my
stop above X% of the ATR. Now I can
apply that to 100 trades, and over 100
trades, I can see, all right, here's
what actually happened, and I can back
test that. I can then carry that forward
into forward testing." And I now have
more of a systematic way of defining my
trade execution with a a a logical stop
placement that I can then review my
journal and slowly tweak. You can't do
that if you're randomly saying, I'm
going to just place my stop at this high
and my stop at this low. That's that's
not really being systematic.
>> That's just a high degree of variance
that it's difficult then to understand
what your edge actually is because some
trades going to stop you, other trades
they're going to work out. But if you
have a way to define your risk structure
per trade, per setup, per strategy,
whether you're risking 02,.5 or 1%. Now
you're talking more about the
probabilistic mathematical nature of
thinking like a professional risk taker
as opposed to a high degree of
randomness. So it's really about
understanding your tactical game, your
mental game, and this is where trading
psychology comes in. Um, I've probably
got on here. I'm not going to read
through this. It's quite exhaustive, but
here are all the A game points that I've
listed out. Here's all my B game points
that I've listed out. And here's all my
C games. So, when I'm reviewing the
trade, when I'm in the trade, I
sometimes quickly scan through this. You
know, once I've executed the trade, I'm
just watching it play out. I quickly
make a note. All right, which one of
these was I experiencing and how many
are applicable to me? because this is
going to go into my trade journal. When
I when I review my performance at the
end of each week, at the end of each
month, I look at all my emotional
performance across each trade that I
take and each trade sits under a
strategy. So, I know the the emotional
response for a given trade and the the
the strategy of all right, this strategy
is causing me to be hesitant. Why is
that? Let me let me now go back to the
charts. let me do some further learning
as to why am I hesitating when it comes
to trade execution or why am I cutting
this trade because I keep doing this as
a regular recurrence.
>> Nobody is ever going to teach you that.
No course is going to teach you that. No
technical strategy that somebody gives
you will ever teach you that. It has to
come from within. Your trading
performance, your evolution and your
development as a trader
is you. Your biggest edge is yourself
and you're working on various edges
which complete or combine together to to
give you an overall edge for a given
strategy. That for me is what edge is.
It's you. We are our own edge because
we're not systematic traders. We're not
algorithmic traders. We are very much
human decision makers, risktakers in
real time. And so there there's a degree
of variance with our emotions
>> and and and it's trying to figure out
how can I um narrow the the level of
variance. So I I see more um consistent
performance moving forward. So that's
mental car game characteristics. Uh
that's tactical game characteristics.
And then let's talk about the final part
which I think is so important in
trading. Um this is from the book by uh
Steven Goldstein. I think it's called
the mental game of trading. Um I've
built my trading frameworks, my trading
psychological frameworks around these
two books. So I really highly recommend
anybody everybody who I've recommended
to has always come back and said to me,
brilliant book, really really good
books. Um and really when you think
about trading, every time I take a
trade, you know, I I I view each trade
as a life cycle. And it's so important
to reset after every trade. After every
trade, whether I got sucked out, whether
I took profit, whether I cut the trade,
I want to finish reviewing that trade
before I even jump into the next trade.
Um, and and and this is where traders go
until because they don't reset. They're
acting and they're acting and they're
acting again. Their ego has taken over
their trading. And what does that mean?
What can that lead to? Well, if you
really think about it, this was
Eduardo's P&L during this period, right?
And at this phase where he didn't reset,
he just shortcuted his entire process,
his entire circuit. He failed to plan
the next trade. He impulsively took it
because he thought, "Oh, you know what?
Price has come to a good level. Let me
just hit it." Well, he's short
circuiting that resetting FA uh phase.
Eventually, he goes through a period of tilt.
tilt. >> Yeah.
>> Yeah.
>> And that's what happens when you come
off process. I I personally experienced
this um two weeks ago. I I broke my
process. Bitcoin was trending down from
98 uh sorry from um when it went from 88
to 82. I tried to long um 88k even
though every single indicator of of mine
every single process would would have
said to me exo this trade is not for
you. Be looking for continuation. What
did I [ __ ] try to do? Oh look, I
think price is oversold. I think this is
worth a good good buy here. Nope. price
went all the way down to 82K and I took
a two and a half% account loss because I
was short on I was long on Bitcoin. I
was long on Ethereum. And then when you
look back and you think [ __ ] hell,
what a [ __ ] what a [ __ ] bit of trading
that was because really I didn't follow
my system. I didn't follow my process. I
I would have been better off not taking
the trade or just waiting for me to
short it again if I got the short setup.
Instead, I came off process. I didn't do
my morning review. I was overtrading
because I was trying to get too
intelligent. I was looking for a long
back into a short as opposed to, oh, if
price bounces and comes back into my
bands, I'm going to short this again.
Well, neither happens. So, was that me
following my strategy? No. Was that me
following a process? No. Was I resetting
after after the previous set of wins?
No. Therefore, I I went on a bit of a
tick. And it's the reason for that
because I never reset. I never truly
reset after the trade. And when when we
go back to what we say, was I really on
my A game? >> Yeah.
>> Yeah.
>> Or was I just on my C game? That was a C
game trade.
>> That is what's holding me back as a
trader. And even my decision- making,
it's being distracted. I wasn't really
focused. Um, I didn't have patience in
my decision-m process. There was a lack
of mental game plan or strategy. Um, I
I'm not blaming anybody, but it is a
lack of control. So, it's very easy to
pick out your C games
>> and once you see what's playing out over
and over and over again, is it your A
game, B game or C game that's coming to
the surface, you'll soon figure out
where your flaws are as a trader. Um, so
these are the resources that I recommend
that I really think are fantastic books and
and
>> I talked about the start why why normal
thinking never wins the trading game. I
think Tom Hugad's book is just such a
fantastic book, especially when it comes
to adding to a winning trade. How often
do we see traders right when they enter
a trade and price is going towards the
target they start scaling out
versus really if you want to make it big
in this game why do you do the opposite
and start thinking about hang on a
minute I'm going to go for the jugular
let me add to this trade if there's a
higher probability of degree of price
going to your target then add to it you
know go for the jugular keep your risk
static you're you can still keep adding
to a trade risking 0.5% and you can get
some serious notional size behind that
trade because you're dynamically you are
dynam not statically but you are dynamically
dynamically
adjusting your stop- loss and as you're
adding to adding size to the trade and
it doesn't have to be significant size
right it could be in small increments
you just keep adding chasing chasing
chasing all the way down you could be
using like the incilico terminal you
could be using a a chase function
>> but then in order to use that you cannot
just rock up to the chart on a trade and
think oh you know what today I'm going
to use a chase function because you
never back tested that you don't know
what that you don't know what that looks
like. You haven't got a strategy for
that. You haven't got an execution game
plan for that. So why are you now all of
a sudden think oh look here's a cool
feature running in Silicon Terminal. Why
don't you use chase limit? Well, have
you actually back tested that over 30
examples of over 30 scenarios? No, you
haven't. So again, you are trading
randomness. You are not trading a
trading process. You are not trading a
trading structure. You are literally
just second guessing what the market is
going to do because you don't have any
statistical way of defining or
quantifying your performance. So again,
it comes down to is this something that
you've verified
a number of times, back tested, forward
tested, sample size in a live
environment on a small account where
you've done this over the last 20 times.
>> Mhm. because you're going to learn more
from that than you will trying to
actually do it in a live environment
with with very little um performance
review with very little back testing,
very little for testing because you are
then at that point trading something
that you haven't you're performing in a
way in in a way that you've never per
performed before. You might get away
with it. It might be one-off. It might
be an anomaly. There are certain
conditions that you can't plan, you
can't trade. I understand that. That's
why you've got a level of flexibility.
if this is something that you're trying
to do again and again and again for the
next 1,000 trades, well, how do you know
this is going to work for you if you
haven't back tested it? So,
>> that's the psychological aspect. That's
the mental aspect. That's kind of the
the whole, you know, the way I've really
come to think about trading really in a
nutshell when I think about trading. How
could I summarize it best? You are
looking for market inefficiencies that
play out over and over again. and you
are looking to exploit those
inefficiencies by figuring out what
happens every time. What are the
variations of this happening like what
the subtle differences between exhibit
A, exhibit B, exhibit C and how can I
trade this? How can I structure a trade
around this? How can I structure my stop
loss? What's my position sizing going to
look for this trade? What kind of
targets am I working for? Right? Quite
often we see crypto traders go from A to
B, from supply to demand. Well, what if
you can chalk off in which which might
be a two-hour trade, but what if you can
chalk off a 4-hour trade where you're
covering less less than half the
distance of what you used to do before
because you've now managed to really
refine your execution. So, edge is an execution.
execution. >> Mhm.
>> Mhm.
>> And and and and people talk about having
a trading strategy, but nobody ever
seems to talk about execution strategy. M
M
>> you've got to have trading strategies,
patterns that you play. And within each
of those strategies, you're going to
have two, three ways that you execute a
trade. Is it a funding thing? Is it is
it are you looking for a drop off in
open interest and a spike in
liquidations? You know, are you looking
for, like I said, forced sellers, forced
buyers? Are you looking for tapering of
a volume profile at the edge of a of a
of a composite or at the edge of a
trading range? Whatever it is, figure it
out. Back test it. look at how you can
structure um your trade around those and
then we go into routine. Obviously, I
think you know it's a nice segue into
rooting. But before we do, I don't know
if there's any questions. I've been
rambling on. So,
>> um maybe we can just go go back another
slide um to the resources and just read
them out for like the people that are
only listening.
>> Oh, for for the for the resources. Yeah.
>> Yeah. Yeah. Because I think they're
>> all right. So,
>> good to know.
>> Yeah. So in terms of the the further
resources that I really highly
recommend, um I think there were four
books, there is a fifth book that I'm
reading which I probably won't mention
yet until I've reviewed it. But the four
books that I think were very very
impactful on my trading over the last
three four years. Uh the first one is
Mastering the Mental Game of Trading by
Steven Goldstein.
>> The second one is the mental game of
trading by Jara Tendler. I think these
two are really
central in
so I've got I've got the technical
ability but then how can I encapsulate
my trading from a psychological
performance perspective mindset
performance understanding
that it's it's the mental game of
trading which is actually going to make
or break me not just my technical skill
set but but the but the two combined and
like I said you've got to have a level
of positive expectancy, an edge, a
strategy where this then becomes
applicable because now you're applying
it to something that you're looking to
repeat in the market as opposed to, oh,
I need to work on my mental game of
trading because I keep losing. All
right, you keep losing, but is it
because you're following a strategy? Is
it because you're following a process?
Or is it the case that one doesn't
exist? And so if you try to go down the
psychological route, it's not really
going to make much difference because
you're not you're not able to um
incorporate the psych the psychological
aspects of your trading into what is a
clearly defined blueprint. And if you
can't explain and and I've got a
question that I always say to people, if
you can't explain one trading strategy
within 5 minutes, then do you actually
have a strategy? Do you have edge? >> Mhm.
>> Mhm.
>> You can't have edge because you don't
have a strategy. And if you can't
explain your strategy, then you need to
stop trading. You need to go back to the drawing board like I did, sit down and
drawing board like I did, sit down and work out and read the market, understand
work out and read the market, understand the market, see what patterns are
the market, see what patterns are playing out, and then dec
with with humans, right? When when we see Black Fridays are around the corner,
see Black Fridays are around the corner, are we really going to go purchase some
are we really going to go purchase some electrical goods one week before? Yeah,
electrical goods one week before? Yeah, some people do. That's fine. Other
some people do. That's fine. Other people want to buy value.
people want to buy value. >> Well, what's the pattern there? Well,
>> Well, what's the pattern there? Well, you know, Black Friday's coming. there's
you know, Black Friday's coming. there's an opportunity in the market for you to
an opportunity in the market for you to actually buy that watch at 30 40% or buy
actually buy that watch at 30 40% or buy an iPad at a heavily discounted price.
an iPad at a heavily discounted price. You're going to take advantage of that
You're going to take advantage of that because that doesn't normally happen.
because that doesn't normally happen. It's the same with trading. You see
It's the same with trading. You see these inefficiencies. You see these
these inefficiencies. You see these opportunities.
opportunities. >> Well, have you seen them enough times to
>> Well, have you seen them enough times to think, "Oh, you know what?
think, "Oh, you know what? >> I need to figure out how to actually
>> I need to figure out how to actually trade this because I can make some good
trade this because I can make some good money out of this." And therefore,
money out of this." And therefore, you're now thinking about trading
you're now thinking about trading professionally. You're thinking about
professionally. You're thinking about the game in a different dimension than
the game in a different dimension than than randomly just rocking up. Oh,
than randomly just rocking up. Oh, here's support, here resistance, let me
here's support, here resistance, let me take this trade. And the beauty of that
take this trade. And the beauty of that is that once you've then got the um
is that once you've then got the um trading strategy, you can then create a
trading strategy, you can then create a filter around that. So when these set of
filter around that. So when these set of rules occur, then let me know which
rules occur, then let me know which trades I should be looking at, which I I
trades I should be looking at, which I I need to take or act upon. And so the two
need to take or act upon. And so the two work together. Now now you have instead
work together. Now now you have instead of some random filter where you're
of some random filter where you're chasing momentum that there's actually a
chasing momentum that there's actually a real purpose behind you developing that
real purpose behind you developing that filter because it's derived from your
filter because it's derived from your strategy. So instead of looking for
strategy. So instead of looking for trades across the market, let's just say
trades across the market, let's just say you trade equities, thousands of equity
you trade equities, thousands of equity pairs out there.
pairs out there. >> Mhm.
>> Mhm. >> You now have a system which is going to
>> You now have a system which is going to bring you oh you know what exo these
bring you oh you know what exo these three trades are the ones that you
three trades are the ones that you should be paying attention today because
should be paying attention today because they've just given you uh a trigger to
they've just given you uh a trigger to think about executing your freight.
think about executing your freight. they're breaking out or they've just had
they're breaking out or they've just had a surge in uh relative volume.
a surge in uh relative volume. Something's happening. Go check it out.
Something's happening. Go check it out. Look at the volatility. So, they're the
Look at the volatility. So, they're the two books. And the other one is Alpha
two books. And the other one is Alpha Trader by Brent Donnelly. And then The
Trader by Brent Donnelly. And then The Best Loser Wins by Tom Hug, which I
Best Loser Wins by Tom Hug, which I think is a another brilliant
think is a another brilliant um insight into somebody who is a high
um insight into somebody who is a high stakes trader. You know, somebody who
stakes trader. You know, somebody who isn't just trading a $1,000 account.
isn't just trading a $1,000 account. We're talking about somebody who's
We're talking about somebody who's putting on some serious size on trades
putting on some serious size on trades and has been doing it at a high level
and has been doing it at a high level for many, many years. Uh, and if you
for many, many years. Uh, and if you want to learn to become better, then
want to learn to become better, then you've got to look at what the best have
you've got to look at what the best have done in this game
done in this game >> and and take it from there and try to
>> and and take it from there and try to replicate and emulate their process,
replicate and emulate their process, their mindset. Not their strategy, not
their mindset. Not their strategy, not their technical skill set, but their
their technical skill set, but their core genetic, mental, emotional
core genetic, mental, emotional framework that has led to them being
framework that has led to them being successful and and where they are today.
successful and and where they are today. >> I actually have another question. Um,
>> I actually have another question. Um, >> sure. Most of my questions have been
>> sure. Most of my questions have been previously taken by you already because
previously taken by you already because they've been pretty extensive which I
they've been pretty extensive which I appreciate a lot. Um but I'm thinking
appreciate a lot. Um but I'm thinking because you've mentioned before to me
because you've mentioned before to me that um you are interested in more um
that um you are interested in more um algorithmic
algorithmic traders. Um would you say like the the
traders. Um would you say like the the endgame of everything that you're
endgame of everything that you're describing here is becoming an
describing here is becoming an algorithmic trader or is it still going
algorithmic trader or is it still going to be discretionary but just like way
to be discretionary but just like way more systematic and refined? Does it
more systematic and refined? Does it make sense?
make sense? >> Um yeah, it's it's an interesting
>> Um yeah, it's it's an interesting question. Um I think where I am today,
question. Um I think where I am today, look, I come from a software engineering
look, I come from a software engineering background. You know, I was a software
background. You know, I was a software developer for 10 12 years. Um I kind of
developer for 10 12 years. Um I kind of fell out of love
fell out of love of coding. You know, I I kind of got
of coding. You know, I I kind of got bored of it. 2020, I quit my career to
bored of it. 2020, I quit my career to go full-time trading. But now with the
go full-time trading. But now with the emergence of uh chpts and LLMs,
emergence of uh chpts and LLMs, it's given me a whole new lease of life.
it's given me a whole new lease of life. what would have taken three four weeks
what would have taken three four weeks to figure out
to figure out is taken a matter of days to put
is taken a matter of days to put together as a prototype.
together as a prototype. And so I I'm not looking to become a
And so I I'm not looking to become a quant by any means, but I am
quant by any means, but I am incorporating a high degree of um
incorporating a high degree of um scanners, screeners, filters customuilt
scanners, screeners, filters customuilt by myself, for myself with push
by myself, for myself with push notifications
notifications >> because this is information edge. M this
>> because this is information edge. M this is um systems that are aligned to my
is um systems that are aligned to my strategies that I'm looking to trade the
strategies that I'm looking to trade the opportunities that I want to trade. And
opportunities that I want to trade. And so it's about finding those
so it's about finding those opportunities in the market, finding
opportunities in the market, finding those inefficiencies in the market. Um
those inefficiencies in the market. Um and and then when I think about it from
and and then when I think about it from a systematic
a systematic approach, um it's more well
approach, um it's more well we live in a time where
we live in a time where you know raw data isn't just the only
you know raw data isn't just the only edge. um it's about filtering that data,
edge. um it's about filtering that data, understanding that data and where real
understanding that data and where real edge is found.
edge is found. >> And so that's where I've been
>> And so that's where I've been transitioning towards, you know,
transitioning towards, you know, building tools in in AI to understand my
building tools in in AI to understand my trading journal, my trading performance.
trading journal, my trading performance. Can I extract all the trades that I've
Can I extract all the trades that I've journaled into a CSV file and then put
journaled into a CSV file and then put it through some LLMs and then query it
it through some LLMs and then query it and filter it and find out more about my
and filter it and find out more about my own trading performance. So that's
own trading performance. So that's another insight that I feel people could
another insight that I feel people could tap into to really get some insight. But
tap into to really get some insight. But to get to that level, you have to
to get to that level, you have to journal your trades, obviously.
journal your trades, obviously. >> Um, and then I'm trying to build systems
>> Um, and then I'm trying to build systems that track volatility regime changes,
that track volatility regime changes, uh, that ch that show, um, a shift in
uh, that ch that show, um, a shift in uh, structural levels that mon monitor
uh, structural levels that mon monitor statistical patterns, uh, that scan for
statistical patterns, uh, that scan for certain setup conditions. And then it's
certain setup conditions. And then it's not just about trying to find, find,
not just about trying to find, find, find find. I'm also, like I mentioned, I
find find. I'm also, like I mentioned, I took a trade um, when I tried to long
took a trade um, when I tried to long Bitcoin and Ethereum on the way down.
Bitcoin and Ethereum on the way down. Well, I've started to work on that
Well, I've started to work on that because I realized that I need to keep
because I realized that I need to keep that [ __ ] out of my game if I really
that [ __ ] out of my game if I really want to hit true elite performance.
want to hit true elite performance. >> And so, I've built out a filtering
>> And so, I've built out a filtering system now to to alert me, not alert me
system now to to alert me, not alert me in the sense, oh, here you go. Here's an
in the sense, oh, here you go. Here's an alert. It's just to show me that, you
alert. It's just to show me that, you know what, keep out this trade. It's
know what, keep out this trade. It's visually telling me that this trade
visually telling me that this trade isn't for you. Keep well away. So,
isn't for you. Keep well away. So, sometimes it's about creating filters
sometimes it's about creating filters that keep you out of bad trades and then
that keep you out of bad trades and then other filters that bring to your
other filters that bring to your attention some really good trading
attention some really good trading opportunities. Um and and so the whole
opportunities. Um and and so the whole edge here is really decision-m edge and
edge here is really decision-m edge and you're reducing that aspect of human
you're reducing that aspect of human variance that human variability that
variance that human variability that creeps in our game time and time again.
creeps in our game time and time again. >> Mhm. Um and so yeah that that that's
>> Mhm. Um and so yeah that that that's where I think the power of LLMs and GPTs
where I think the power of LLMs and GPTs and automation comes in and then you can
and automation comes in and then you can take it further you know uh the other
take it further you know uh the other thing that I'm currently trying to
thing that I'm currently trying to revamp is is is create a D is to create
revamp is is is create a D is to create an automated dynamic
an automated dynamic trailing uh ATR based stop. So, you
trailing uh ATR based stop. So, you know, if I'm away from the screens, if
know, if I'm away from the screens, if I'm away from the desk, I don't have a
I'm away from the desk, I don't have a hard stop or a static stop,
hard stop or a static stop, >> I can switch on the algorithm and it
>> I can switch on the algorithm and it will incrementally keep adjusting my
will incrementally keep adjusting my stop based on some parameters. And that
stop based on some parameters. And that that's something again that I'm back
that's something again that I'm back testing. I'm trying to figure out how to
testing. I'm trying to figure out how to build that. And and it's no different I
build that. And and it's no different I think when you start thinking in a
think when you start thinking in a quantitative way in a systematic way as
quantitative way in a systematic way as a as a discretionary trader you'll
a as a discretionary trader you'll actually realize that implicitly
actually realize that implicitly it enforces you enforces you to think
it enforces you enforces you to think about trading in a different dimension.
about trading in a different dimension. >> It it really opens your mind to thinking
>> It it really opens your mind to thinking actually you know what I really need to
actually you know what I really need to think long and hard about my trading now
think long and hard about my trading now because I'm really trying to get as much
because I'm really trying to get as much edge and extraction out of my
edge and extraction out of my performance as opposed to just doing
performance as opposed to just doing what everybody else is doing. And it
what everybody else is doing. And it comes back to what are you doing
comes back to what are you doing different that's that's going to allow
different that's that's going to allow you to become a better trader. Not you
you to become a better trader. Not you against other people. You're just
against other people. You're just competing against the market. It's about
competing against the market. It's about you against yourself.
you against yourself. >> Uh and that's where I think
>> Uh and that's where I think technological edge really comes into
technological edge really comes into play.
play. >> Yeah, that makes sense.
>> Yeah, that makes sense. I think uh we can go on with what you
I think uh we can go on with what you have further.
have further. >> Yeah. Um so I think we we'll talk about
>> Yeah. Um so I think we we'll talk about routine for two three minutes. You know
routine for two three minutes. You know really if you think about it
really if you think about it routine is core to everything that I do.
routine is core to everything that I do. If you recall the example that I gave
If you recall the example that I gave you that I took a trade on Bitcoin and E
you that I took a trade on Bitcoin and E Ether I lost. Why? Because I I bypass my
Ether I lost. Why? Because I I bypass my routine. I
routine. I I've always said you've got to have a
I've always said you've got to have a routine. If you don't enjoy it, you're
routine. If you don't enjoy it, you're not going to do it. There's no point in
not going to do it. There's no point in creating a training manual and say, "Oh,
creating a training manual and say, "Oh, I've just made my daily routine." And
I've just made my daily routine." And then
then >> one week later,
>> one week later, >> you haven't even looked at your daily
>> you haven't even looked at your daily routine. You haven't even done anything
routine. You haven't even done anything about it. Well,
about it. Well, >> were you just
>> were you just playing mental gymnastics to make
playing mental gymnastics to make yourself feel better about the fact that
yourself feel better about the fact that you've written a trading routine, but
you've written a trading routine, but you're not following it? Well, that's
you're not following it? Well, that's not very helpful. So, it's something
not very helpful. So, it's something that you have to understand
that you have to understand >> about yourself. what's going to enforce
>> about yourself. what's going to enforce you to to to remain this is discipline.
you to to to remain this is discipline. You know, when people talk about
You know, when people talk about discipline, when people talk about
discipline, when people talk about patience, well, what does that mean?
patience, well, what does that mean? You've got to have a a systematic way to
You've got to have a a systematic way to to approach that. And for me, that's
to approach that. And for me, that's that's having a routine. Without
that's having a routine. Without structure, without consistency, we're
structure, without consistency, we're we're setting up for failure.
we're setting up for failure. >> Um and and and so what why is a routine
>> Um and and and so what why is a routine important? Because it builds
important? Because it builds consistency. It sharpens your focus. It
consistency. It sharpens your focus. It improves execution because you're
improves execution because you're thinking about the trade. You're you're
thinking about the trade. You're you're trying to get into that flow state.
trying to get into that flow state. You're trying to get into the zone of
You're trying to get into the zone of trading. You're trying to be in sync
trading. You're trying to be in sync with the market. You you're looking for
with the market. You you're looking for um market rotations. What environments
um market rotations. What environments are you in? You're trying to gauge the
are you in? You're trying to gauge the market sentiment on a daily basis. What
market sentiment on a daily basis. What is the structure telling you? What is
is the structure telling you? What is the momentum telling you? So everything
the momentum telling you? So everything here that that I I I've written is
here that that I I I've written is exactly where I broke when when I didn't
exactly where I broke when when I didn't even go through any of this when I took
even go through any of this when I took that took a losing trade. So it's very
that took a losing trade. So it's very easy for me to rectify that. But but
easy for me to rectify that. But but there's nothing more frustrating or
there's nothing more frustrating or annoying than actually taking
annoying than actually taking substandard trades that have nothing to
substandard trades that have nothing to do with who I am as a trader.
do with who I am as a trader. >> Yeah.
>> Yeah. >> It's it's just [ __ ] trading. That's it.
>> It's it's just [ __ ] trading. That's it. >> Um and so the key steps of a daily
>> Um and so the key steps of a daily routine, what does mine look like? So I
routine, what does mine look like? So I kind of summarize it here. It's
kind of summarize it here. It's reviewing the process, reviewing any
reviewing the process, reviewing any overnight positions, reviewing any limit
overnight positions, reviewing any limit orders, stop orders, whatever it is.
orders, stop orders, whatever it is. Understanding the current market context
Understanding the current market context and volatility regime. I think this is
and volatility regime. I think this is really important which we'll touch upon.
really important which we'll touch upon. uh building situational awareness, you
uh building situational awareness, you know, understanding yourself really and
know, understanding yourself really and the situation that you are looking at in
the situation that you are looking at in the market, creating a focus list, being
the market, creating a focus list, being organized. That's is where scanners and
organized. That's is where scanners and filters come into play.
filters come into play. >> Uh building the game plan. All right,
>> Uh building the game plan. All right, you've mapped out your levels, you
you've mapped out your levels, you looked at market profile, you've looked
looked at market profile, you've looked at the floor, you looked at the book
at the floor, you looked at the book depth, you've looked at the overnight
depth, you've looked at the overnight 24-hour volume, were there any
24-hour volume, were there any liquidations, were there any news
liquidations, were there any news events? Um you know, is open interest
events? Um you know, is open interest building up, which is going to cause a
building up, which is going to cause a risk to the market. So it's just having
risk to the market. So it's just having awareness about the domain that you're
awareness about the domain that you're operating in. And then obviously trade
operating in. And then obviously trade execution. What are you looking for to
execution. What are you looking for to execute that trade? What specifically
execute that trade? What specifically do you need to see? And this is where
do you need to see? And this is where you have a level of um implicitness in
you have a level of um implicitness in in your mind because you've seen this
in your mind because you've seen this play out again and again and again from
play out again and again and again from a trade execution point of view. You
a trade execution point of view. You know exactly what you're looking for. Is
know exactly what you're looking for. Is it a three drives into resistance? Is it
it a three drives into resistance? Is it three drives into support? Is it are you
three drives into support? Is it are you waiting for that third drive to take out
waiting for that third drive to take out the previous low with aggressive selling
the previous low with aggressive selling into those lows to get long? You know,
into those lows to get long? You know, that's a a really logical way of
that's a a really logical way of thinking about the market. When it comes
thinking about the market. When it comes to trade execution, you're trying to
to trade execution, you're trying to anticipate if price does this, here's
anticipate if price does this, here's what I think could happen and here's
what I think could happen and here's what I what it could probably look like
what I what it could probably look like because I've back tested this over 30
because I've back tested this over 30 times as opposed to, oh, price does that
times as opposed to, oh, price does that support. I think I'm going to punt to
support. I think I'm going to punt to long here, stop below this low. Yeah,
long here, stop below this low. Yeah, fine. You can do that. But what if you
fine. You can do that. But what if you can enhance that execution from being a
can enhance that execution from being a three-hour trade to a 4-hour trade
three-hour trade to a 4-hour trade because you really understood the
because you really understood the context of price when you're looking to
context of price when you're looking to execute that trade.
execute that trade. >> And not only that, you don't have to
>> And not only that, you don't have to take a full one hour loss because you
take a full one hour loss because you realize that, oh, all right, your
realize that, oh, all right, your execution was on point. The market did
execution was on point. The market did what it did to the point of execution,
what it did to the point of execution, but half an hour later, there's a news
but half an hour later, there's a news event. Now all of a sudden, you have to
event. Now all of a sudden, you have to be questioning, what is the market
be questioning, what is the market doing? Where is it trying to go? Is it
doing? Where is it trying to go? Is it doing what I expected it to do? Or do I
doing what I expected it to do? Or do I need to change my plan? That's what you
need to change my plan? That's what you call having a level of of of of of
call having a level of of of of of adaptability during trade execution
adaptability during trade execution because you're still managing that trade
because you're still managing that trade at the point of execution and soon after
at the point of execution and soon after execution until it's pushed away. And
execution until it's pushed away. And then obviously, you know, at the end of
then obviously, you know, at the end of the day, write down what you did well,
the day, write down what you did well, what what you what you didn't do very
what what you what you didn't do very well. And sometimes you can be mentally
well. And sometimes you can be mentally fatigued. Come back the next day. Don't
fatigued. Come back the next day. Don't take another trade until you reviewed
take another trade until you reviewed your performance from the previous day.
your performance from the previous day. Or if you missed a trade, why did you
Or if you missed a trade, why did you miss a trade? Were you out? Were you
miss a trade? Were you out? Were you disorganized? Did you not have alerts
disorganized? Did you not have alerts set? So that's part of a routine for me.
set? So that's part of a routine for me. Um and and obviously I don't want to
Um and and obviously I don't want to keep delving on that. I'm sure people
keep delving on that. I'm sure people can figure it out what
can figure it out what >> a good daily routine would look like for
>> a good daily routine would look like for them.
them. >> Risk management obviously we not going
>> Risk management obviously we not going to talk about this too much but you
to talk about this too much but you you've just got to you know can pause or
you've just got to you know can pause or watch this but when it comes to risk
watch this but when it comes to risk management there are several facets of
management there are several facets of risk management which I feel everybody
risk management which I feel everybody not everybody but let's just say a large
not everybody but let's just say a large part of us ignore. When we think about
part of us ignore. When we think about risk management what do we think about?
risk management what do we think about? We just think about money. How much
We just think about money. How much money? That's it. But really risk
money? That's it. But really risk management is is more than just that.
management is is more than just that. It's your psychological risk. Your
It's your psychological risk. Your emotions, your fatigue, your stress,
emotions, your fatigue, your stress, your cognitive bias, all these are going
your cognitive bias, all these are going to impact the way you execute a trade.
to impact the way you execute a trade. Um, and you you've got to remember you
Um, and you you've got to remember you control risk, not outcomes. You know,
control risk, not outcomes. You know, the markets
the markets are a level of uncertainty. Trade setups
are a level of uncertainty. Trade setups fail. So when trade set setups fail, you
fail. So when trade set setups fail, you can control how much you lose. You can't
can control how much you lose. You can't control what the market does, but you
control what the market does, but you certainly can control absolutely you can
certainly can control absolutely you can control how much you're willing to lose
control how much you're willing to lose per trade. Um, if you follow your
per trade. Um, if you follow your control risk procedure and you follow
control risk procedure and you follow your process and then you've got draw
your process and then you've got draw down management. You know, with draw
down management. You know, with draw down, if you take a 30 40% loss on
down, if you take a 30 40% loss on account on one trade,
account on one trade, >> what does that come down to? Was it was
>> what does that come down to? Was it was it down to the fact that you didn't
it down to the fact that you didn't follow your prostate system? Well, it's
follow your prostate system? Well, it's psychologically going to impact you
psychologically going to impact you because now you're in a really [ __ ]
because now you're in a really [ __ ] state and you've got to figure out how
state and you've got to figure out how you're going to make it back. Um, and so
you're going to make it back. Um, and so you it affects your psychological
you it affects your psychological performance moving forward. Your
performance moving forward. Your confidence robs. It takes much longer to
confidence robs. It takes much longer to recover. I I I took a like I said, I
recover. I I I took a like I said, I took a 3% loss. I I stepped away from
took a 3% loss. I I stepped away from trading because I thought, "Fucking
trading because I thought, "Fucking hell, I've got to I don't want to take
hell, I've got to I don't want to take any more [ __ ] trades. I just need to
any more [ __ ] trades. I just need to take a break. I think I'm fatigued here.
take a break. I think I'm fatigued here. I've probably been overtrading. I've
I've probably been overtrading. I've made so much. I've taken so many trades.
made so much. I've taken so many trades. I've done really well. I'm at that point
I've done really well. I'm at that point now where I'm think I'm starting to give
now where I'm think I'm starting to give it back. I'm coming off my process. I
it back. I'm coming off my process. I need to step away. So, again,
need to step away. So, again, situational and awareness. I don't want
situational and awareness. I don't want to revenge trade. I don't want to try
to revenge trade. I don't want to try and make it back on the next trade. I'm
and make it back on the next trade. I'm just going to step away. Let me take a
just going to step away. Let me take a few days off. I'll come back to trading
few days off. I'll come back to trading the market next week. And that's what I
the market next week. And that's what I did. Started off with a with a very
did. Started off with a with a very decent uh win. Ma made 1% back of of the
decent uh win. Ma made 1% back of of the account loss. But that's not how I look
account loss. But that's not how I look at trading because I look at it from
at trading because I look at it from every week is a fresh week. Whatever
every week is a fresh week. Whatever happened in the previous week, I've
happened in the previous week, I've journaled, documented, logged, done.
journaled, documented, logged, done. Next week, here is my target. I'm trying
Next week, here is my target. I'm trying to operate at 1 and a half% account gain
to operate at 1 and a half% account gain per week and with a maximum of maximum
per week and with a maximum of maximum draw down of 5%. That's rolling draw
draw down of 5%. That's rolling draw down. So really, I don't care if if I've
down. So really, I don't care if if I've taken 10 losses and only lost 2% of my
taken 10 losses and only lost 2% of my account, I don't really care about that
account, I don't really care about that in the sense where you see a lot of
in the sense where you see a lot of people talk about, oh, if you take two,
people talk about, oh, if you take two, three, four losses in a row, you should
three, four losses in a row, you should stop trading. I disagree. I think if
stop trading. I disagree. I think if you've got very disciplined risk
you've got very disciplined risk management, what if I've taken six
management, what if I've taken six losses in a row and all of them equated
losses in a row and all of them equated to just a minus 1% account loss because
to just a minus 1% account loss because I've just taken small scratches. Should
I've just taken small scratches. Should I stop trading now? No. I followed my
I stop trading now? No. I followed my process. I followed my system. I'm going
process. I followed my system. I'm going to go into the next trade because I've
to go into the next trade because I've got very good control of my risk
got very good control of my risk management. I'm not going on a tilt. I'm
management. I'm not going on a tilt. I'm not losing control of my emotions. I
not losing control of my emotions. I mean, I'm very I'm staying very
mean, I'm very I'm staying very structured and very disciplined. and the
structured and very disciplined. and the riskmanagement aspect of that works
riskmanagement aspect of that works simultaneously with the emotional side
simultaneously with the emotional side of trading from my own experience. And
of trading from my own experience. And so when you appreciate these two, I
so when you appreciate these two, I think it really helps you think about
think it really helps you think about all right, well, I've got to appreciate
all right, well, I've got to appreciate risk management. It works the
risk management. It works the psychological aspects of trading. Now
psychological aspects of trading. Now I'm going to deploy on the strategy.
I'm going to deploy on the strategy. Here's my execution trigger. You feel
Here's my execution trigger. You feel far more calm and collective in the way
far more calm and collective in the way that you trade.
that you trade. >> Mh.
>> Mh. >> And it protects your edge. It ultimately
>> And it protects your edge. It ultimately protects your edge. What is a very good
protects your edge. What is a very good edge, right? Um, just because you take
edge, right? Um, just because you take one big loss, does that mean your edge
one big loss, does that mean your edge is [ __ ] No, it's just that you're [ __ ]
is [ __ ] No, it's just that you're [ __ ] You didn't follow your process? You
You didn't follow your process? You didn't follow your risk management
didn't follow your risk management system, right? So, it I it's a case of
system, right? So, it I it's a case of um just because you're taking losses on
um just because you're taking losses on a given strategy, why are you taking
a given strategy, why are you taking losses on a given strategy? You know, is
losses on a given strategy? You know, is it emotional or is it really technical
it emotional or is it really technical or mental or what was it? So it that
or mental or what was it? So it that that's another reason why you could give
that's another reason why you could give me a brilliant winning strategy and yet
me a brilliant winning strategy and yet for me that could be my worst performing
for me that could be my worst performing strategy, it's a losing strategy. Why is
strategy, it's a losing strategy. Why is that? The strategy is fine.
that? The strategy is fine. >> It's the person who's operating the
>> It's the person who's operating the strategy. You know, that's the issue
strategy. You know, that's the issue right there.
right there. >> Um and and so it protects your edge.
>> Um and and so it protects your edge. Risk management protects your edge. You
Risk management protects your edge. You know, you you rely on execution. You you
know, you you rely on execution. You you have a consistent way of trading. You've
have a consistent way of trading. You've got it gives you longevity in the game.
got it gives you longevity in the game. And then if you look at elite traders,
And then if you look at elite traders, they all use they all instant Kelly
they all use they all instant Kelly criterion. They all understand bet
criterion. They all understand bet sizing, position sizing, thinking in
sizing, position sizing, thinking in bets. They all know how to grade their
bets. They all know how to grade their setups. And if you don't journal your
setups. And if you don't journal your setups, how do you know how to grade
setups, how do you know how to grade them? How do you know which ones are
them? How do you know which ones are your best performing strategies? Um, and
your best performing strategies? Um, and so top traders, elite traders understand
so top traders, elite traders understand expected value. They understand on their
expected value. They understand on their a setup how much they're willing to size
a setup how much they're willing to size up, you know, how much they're willing
up, you know, how much they're willing to risk and and elite traders like Tom
to risk and and elite traders like Tom Hugard who adds to his winners. That's
Hugard who adds to his winners. That's dynamic position sizing right there.
dynamic position sizing right there. It's not one entry with a stop and a
It's not one entry with a stop and a target. That's just very very static.
target. That's just very very static. And I used to be like that. That's how I
And I used to be like that. That's how I used to trade in 2020, 2021. And you
used to trade in 2020, 2021. And you realize, well, this is just what
realize, well, this is just what everybody else is doing. Surely there's
everybody else is doing. Surely there's got to be more to becoming an elite
got to be more to becoming an elite trader than just
trader than just entry, stop, target. And it is. I think
entry, stop, target. And it is. I think it's it's being dynamic where your risk
it's it's being dynamic where your risk is always dynamic. Your your position
is always dynamic. Your your position sizing is dynamic. Your notional size
sizing is dynamic. Your notional size can be dynamic. You know, let's let's
can be dynamic. You know, let's let's just say for in an example,
just say for in an example, I execute a trade with 0.5% risk. Price
I execute a trade with 0.5% risk. Price pushes away from my level. It comes back
pushes away from my level. It comes back on me. It's now against me. I've got two
on me. It's now against me. I've got two choices. do nothing and let the market
choices. do nothing and let the market play out fine or I can reduce my risk
play out fine or I can reduce my risk but still keep a level level of exposure
but still keep a level level of exposure on there. So, I'm just reducing how much
on there. So, I'm just reducing how much I'm losing all of a sudden because if it
I'm losing all of a sudden because if it goes further against me, I've not taken
goes further against me, I've not taken a full one hour loss. I've taken a half
a full one hour loss. I've taken a half hour loss just because I reduced the
hour loss just because I reduced the risk as it was going against me.
risk as it was going against me. >> And that's where
>> And that's where thinking dynamically about risk comes
thinking dynamically about risk comes into play as opposed to, oh, [ __ ] it,
into play as opposed to, oh, [ __ ] it, I'll just take the loss. I'll just take
I'll just take the loss. I'll just take the one hour. It's only 1 hour. No, if
the one hour. It's only 1 hour. No, if you can save money, then then do that.
you can save money, then then do that. if you can protect your P&L so then that
if you can protect your P&L so then that when when that setup occurs again you
when when that setup occurs again you can hit it just as hard with conviction
can hit it just as hard with conviction and confidence that you don't mind
and confidence that you don't mind taking a few scratches and so you
taking a few scratches and so you preserve your mental state because it
preserve your mental state because it depends who you are as a trader some
depends who you are as a trader some traders like to have a high win rate
traders like to have a high win rate >> Mhm.
>> Mhm. >> Um where each win is is not really
>> Um where each win is is not really significant. Other traders can operate
significant. Other traders can operate at a 25% win rate. So imagine that
at a 25% win rate. So imagine that you're losing out of every 10 trades
you're losing out of every 10 trades you're losing seven and a half trades
you're losing seven and a half trades and you're only winning on two and a
and you're only winning on two and a half trades out of 10.
half trades out of 10. >> Mhm.
>> Mhm. >> That's out of 100 you've lost 75 trades.
>> That's out of 100 you've lost 75 trades. >> You've only won 25. Psychologically
>> You've only won 25. Psychologically that would [ __ ] up a lot of people
that would [ __ ] up a lot of people because they just keep seeing loss after
because they just keep seeing loss after loss. But if you can embrace the fact
loss. But if you can embrace the fact that you have phenomenal elite level
that you have phenomenal elite level risk management where those 75 those 75
risk management where those 75 those 75 losses,
losses, you've only lost, you know, let's say a
you've only lost, you know, let's say a net minus 9% of your account where the
net minus 9% of your account where the 25 winners you've returned over 100%
25 winners you've returned over 100% return on equity.
return on equity. >> Mhm.
>> Mhm. >> That is is is phenomenal performance
>> That is is is phenomenal performance over a year. and and and so really it's
over a year. and and and so really it's about again it comes down to
about again it comes down to understanding the the maths behind your
understanding the the maths behind your performance, the mathematics as to who
performance, the mathematics as to who you are and what your risk appetite is
you are and what your risk appetite is and what your psycholog psychological
and what your psycholog psychological pedigree is as a trader. Can you can you
pedigree is as a trader. Can you can you handle a low win rate system? Some most
handle a low win rate system? Some most people probably can't. Other people rely
people probably can't. Other people rely on a a high win rate but where the wins
on a a high win rate but where the wins aren't really exceedingly large.
aren't really exceedingly large. >> Mhm. probably at 2 to one, you know,
>> Mhm. probably at 2 to one, you know, maybe half an hour if that consistently
maybe half an hour if that consistently over time where it's their accounts are
over time where it's their accounts are slowly churning higher and higher and
slowly churning higher and higher and higher with a few drops and another
higher with a few drops and another shift higher. Just controlled gradual
shift higher. Just controlled gradual growth is essentially what I'm saying.
growth is essentially what I'm saying. Um,
Um, so key risk concepts, you know, you're a
so key risk concepts, you know, you're a risk manager first, a trader second.
risk manager first, a trader second. Know your numbers like your life depends
Know your numbers like your life depends upon it because in this game it does
upon it because in this game it does matter. Um, you can't build consistency
matter. Um, you can't build consistency if you are always recovering from deep
if you are always recovering from deep draw downs. Okay, that's going on tilt.
draw downs. Okay, that's going on tilt. You you are up against it. Every time
You you are up against it. Every time you take a hit large loss or a big loss,
you take a hit large loss or a big loss, it it's really setting you back 10. Um,
it it's really setting you back 10. Um, and and I test I think of that like that
and and I test I think of that like that like the snakes and ladders game board
like the snakes and ladders game board where you roll a dice, you go six steps
where you roll a dice, you go six steps up, the minute you [ __ ] land on a
up, the minute you [ __ ] land on a snake, you're 30 steps back down, you
snake, you're 30 steps back down, you have to start again. And that's you've
have to start again. And that's you've got to avoid those snakes. And those
got to avoid those snakes. And those snakes is you with your poor risk
snakes is you with your poor risk management. Yeah.
management. Yeah. >> And and and lack of discipline and lack
>> And and and lack of discipline and lack of structure and lack of patience.
of structure and lack of patience. Because again, people talk about, oh, be
Because again, people talk about, oh, be patient in trading. Well, a lot of
patient in trading. Well, a lot of people think being patient means waiting
people think being patient means waiting for the right setup. No, it doesn't.
for the right setup. No, it doesn't. It's not only that. Being patient means,
It's not only that. Being patient means, >> can you do this for the next 1,000
>> can you do this for the next 1,000 trades over a 10-year period? Because if
trades over a 10-year period? Because if you can,
you can, >> there's a very good chance that you
>> there's a very good chance that you you've got a very good career ahead of
you've got a very good career ahead of you. It only takes one bad decision to
you. It only takes one bad decision to come off process. And then when you
come off process. And then when you structure risk properly, you can be
structure risk properly, you can be wrong a lot and still make some serious
wrong a lot and still make some serious money, which is what we've touched upon.
money, which is what we've touched upon. >> Win rate, riskreward, understanding
>> Win rate, riskreward, understanding expectancy is important. Stop obsessing
expectancy is important. Stop obsessing over being right. You know,
over being right. You know, >> 50% win rate, 40% win rate are
>> 50% win rate, 40% win rate are phenomenal if you have positive
phenomenal if you have positive expectancy from those.
expectancy from those. >> All right, so strategy creation. Uh this
>> All right, so strategy creation. Uh this is probably going to be the last segment
is probably going to be the last segment that I cover. Um now that we've built
that I cover. Um now that we've built the foundation of self-awareness,
the foundation of self-awareness, understanding the uncertainty of
understanding the uncertainty of markets, understanding what is edge,
markets, understanding what is edge, what is expectancy, what does the level
what is expectancy, what does the level of structure look like, understanding
of structure look like, understanding how the emotional
how the emotional facets can impact our trading. Um we can
facets can impact our trading. Um we can now talk about trading strategy
now talk about trading strategy creation. And so I'm not going to go
creation. And so I'm not going to go into too much detail, but
into too much detail, but like I said before, when you're looking
like I said before, when you're looking to create a strategy, really all you're
to create a strategy, really all you're doing is looking for inefficiencies in
doing is looking for inefficiencies in the market, and you're trying to exploit
the market, and you're trying to exploit those inefficiencies. And so you have to
those inefficiencies. And so you have to understand the environment in which they
understand the environment in which they occur, how they operate, and how you can
occur, how they operate, and how you can trade around them. So the 15 principles
trade around them. So the 15 principles and this is the template that I use
and this is the template that I use every time I try to create a new trading
every time I try to create a new trading strategy. This is something that I go
strategy. This is something that I go through and and and the first purpose is
through and and and the first purpose is is to define the core hypothesis. And
is to define the core hypothesis. And I'm just going to quickly run through
I'm just going to quickly run through this. But what does this mean? Define
this. But what does this mean? Define the core hypothesis.
the core hypothesis. It's start
It's start clearly by stating why the market should
clearly by stating why the market should behave a certain way under specific
behave a certain way under specific conditions. So you're really
conditions. So you're really understanding how the market is playing
understanding how the market is playing out. Is that following a set of moving
out. Is that following a set of moving averages where the moving averages and
averages where the moving averages and the degree of the momentum or the bands
the degree of the momentum or the bands are increasing? That tells you the
are increasing? That tells you the momentum is picking up.
momentum is picking up. >> So should you be range trading that or
>> So should you be range trading that or should you be looking for continuation
should you be looking for continuation momentum? So define and understand you
momentum? So define and understand you know um why the market should behave in
know um why the market should behave in a certain way under specific conditions
a certain way under specific conditions and and that is where it leans into
and and that is where it leans into identifying point number two or the
identifying point number two or the second principle identify the market
second principle identify the market condition. So many people try to deploy
condition. So many people try to deploy a strategy in the wrong environment. The
a strategy in the wrong environment. The problem isn't the strategy. The problem
problem isn't the strategy. The problem is you you're not recognizing the
is you you're not recognizing the volatility regime that you're in. Um,
volatility regime that you're in. Um, and so you've got to link any strategy
and so you've got to link any strategy to the highle context, key zones,
to the highle context, key zones, structural levels, volatility regime,
structural levels, volatility regime, sentiment. Maybe it's a time of day. We
sentiment. Maybe it's a time of day. We know that in during New York session,
know that in during New York session, Bitcoin volatility generally picks up.
Bitcoin volatility generally picks up. >> Principle number three, anchor the setup
>> Principle number three, anchor the setup to the context. So this is it. This is
to the context. So this is it. This is what's important. So now that you've
what's important. So now that you've defined the volatility regime,
defined the volatility regime, you can now say, "All right, this is the
you can now say, "All right, this is the type of strategy that works best in this
type of strategy that works best in this environment." And there are five types.
environment." And there are five types. It's either going to be trend, it's
It's either going to be trend, it's going to be a range, it's going to be a
going to be a range, it's going to be a breakout, a rotation or a mean
breakout, a rotation or a mean reversion. So now you figured out, all
reversion. So now you figured out, all right, this is a trend environment or
right, this is a trend environment or this is a bracketing environment or this
this is a bracketing environment or this is a a range environment. I I figured
is a a range environment. I I figured out the the volatility. I know that by
out the the volatility. I know that by measuring the ATR. I I now know what
measuring the ATR. I I now know what type of environment I'm looking at. I
type of environment I'm looking at. I don't think we're going to break out
don't think we're going to break out into a newer trend. I think we're just
into a newer trend. I think we're just going to oscillate between
going to oscillate between value area high and value area value
value area high and value area value area low. And I'm looking to trade
area low. And I'm looking to trade around the edges of that volume profile
around the edges of that volume profile or market profile. And then I'm looking
or market profile. And then I'm looking to understand all right now that I've
to understand all right now that I've understood the context and the strategy
understood the context and the strategy that I'm trying to trade. What's the uh
that I'm trying to trade. What's the uh entry trigger? So define the exact
entry trigger? So define the exact signal that confirms your entry. Is it a
signal that confirms your entry. Is it a pattern? Is it a level interaction? Is
pattern? Is it a level interaction? Is it a confirmation on the flow? Is it a
it a confirmation on the flow? Is it a structure break? you know on on the 1
structure break? you know on on the 1 minute time frame is it a ranko chart
minute time frame is it a ranko chart what is it is it an awesome oscillator
what is it is it an awesome oscillator what is that gives you that shift or
what is that gives you that shift or inflection point to start thinking about
inflection point to start thinking about the uh
the uh about the entry trigger and then
about the entry trigger and then principle number five principle number
principle number five principle number five establish the execution rules
five establish the execution rules understand the timing
understand the timing of the execution
of the execution what type of order types are you going
what type of order types are you going to use this is where using something
to use this is where using something like incilico terminal makes sense
like incilico terminal makes sense because What type of execution
because What type of execution methodology are you now going to apply?
methodology are you now going to apply? How are you going to scale into that
How are you going to scale into that trade? What type of size are you going
trade? What type of size are you going to look to run? And and is your
to look to run? And and is your execution consistent? Or do you have two
execution consistent? Or do you have two or three varying execution strategies
or three varying execution strategies depending upon the environmental
depending upon the environmental context? And I'll give you a classic
context? And I'll give you a classic example.
example. If you're if you know that price is
If you're if you know that price is likely to trade in a range and you get a
likely to trade in a range and you get a very fast move into the range high with
very fast move into the range high with the swing fail and you realize that that
the swing fail and you realize that that was a liquid that was a uh cascading
was a liquid that was a uh cascading liquidations slamming into some passive
liquidations slamming into some passive asks and price pushes very away very
asks and price pushes very away very quickly.
quickly. How are you going to execute on that?
How are you going to execute on that? What is it that you're looking for to
What is it that you're looking for to execute? Sometimes you have to take an
execute? Sometimes you have to take an aggressive execution where you might
aggressive execution where you might have to hit that market. Other times you
have to hit that market. Other times you might say, "All right, I'm going to hit
might say, "All right, I'm going to hit half market and they're going to switch
half market and they're going to switch on a limit chase only up to this point."
on a limit chase only up to this point." But then you need to back test that,
But then you need to back test that, replay that, run that through over 20,
replay that, run that through over 20, 30 samples so you know what that feels
30 samples so you know what that feels like, what that looks like, how that
like, what that looks like, how that plays out. And then obviously you've got
plays out. And then obviously you've got to manage your risk around that. Where's
to manage your risk around that. Where's your stop placement? What in which
your stop placement? What in which instances have you been wrong on your
instances have you been wrong on your back test, on your forward test? So
back test, on your forward test? So again, it's all about pattern
again, it's all about pattern recognition in every single aspect of
recognition in every single aspect of trading that you've seen this enough
trading that you've seen this enough times to execute with conviction,
times to execute with conviction, >> but execute with conviction and that you
>> but execute with conviction and that you know exactly where you're likely to be
know exactly where you're likely to be wrong. Um, point number seven, back test
wrong. Um, point number seven, back test with discipline. Exactly what I said,
with discipline. Exactly what I said, run the strategy through historical
run the strategy through historical data. If you do this on a back test and
data. If you do this on a back test and you record your performance, you can run
you record your performance, you can run that through Monte Cara simulation tests
that through Monte Cara simulation tests to see how it performs over a thousand
to see how it performs over a thousand simulated trades. But don't curve fit
simulated trades. But don't curve fit it. Don't override the signals. Um, and
it. Don't override the signals. Um, and then principle number eight, measure
then principle number eight, measure performance metrics. So, track the
performance metrics. So, track the expectancy of that trade. You know, if
expectancy of that trade. You know, if you've taken that trade and you say,
you've taken that trade and you say, "All right, I'm going to target three or
"All right, I'm going to target three or but it you've noticed that 80% of the
but it you've noticed that 80% of the times on the back test, it doesn't even
times on the back test, it doesn't even get to your target."
get to your target." >> Mhm.
>> Mhm. >> Well, turn it down to 2 R. You've
>> Well, turn it down to 2 R. You've increased the expectancy of that trade
increased the expectancy of that trade now as opposed to I'm going to hit a
now as opposed to I'm going to hit a three tra. I'm waiting for a three-hour
three tra. I'm waiting for a three-hour trade. Price goes to 2 R and it comes
trade. Price goes to 2 R and it comes all the way back to your entry.
all the way back to your entry. >> Yeah.
The reason it did that is because you didn't understand what you're trying to
didn't understand what you're trying to achieve out this setup. You've put all
achieve out this setup. You've put all this emphasis on the execution part, but
this emphasis on the execution part, but you've given very little thought to the
you've given very little thought to the profit taking aspect.
profit taking aspect. Maybe you took a trade at the range high
Maybe you took a trade at the range high and it lined up with some VWAP bands and
and it lined up with some VWAP bands and you're looking, you know, the second
you're looking, you know, the second standard deviation and you're looking to
standard deviation and you're looking to trade it back into the the VWAP uh
trade it back into the the VWAP uh price level. What what if it doesn't get
price level. What what if it doesn't get there? You know, what if it gets to the
there? You know, what if it gets to the first standard deviation only? But then
first standard deviation only? But then you realize, hang on a minute. Every
you realize, hang on a minute. Every time I've gone through my sample size of
time I've gone through my sample size of back test of 50 trades, there's a high
back test of 50 trades, there's a high degree of probability and expectancy
degree of probability and expectancy that price always mean reverts from the
that price always mean reverts from the second to the first before it gets to
second to the first before it gets to the to the VWAP level.
the to the VWAP level. >> This is a really good trade. Maybe I can
>> This is a really good trade. Maybe I can take 50% off of this level. Or maybe I
take 50% off of this level. Or maybe I can just maybe this is maybe this is an
can just maybe this is maybe this is an edge I can develop. Maybe this is all I
edge I can develop. Maybe this is all I need to trade. a mean reversion from
need to trade. a mean reversion from third standard deviation to the first
third standard deviation to the first standard deviation. If I can do that
standard deviation. If I can do that over a thousand trades, I've got a good
over a thousand trades, I've got a good tra trading career ahead of me with a
tra trading career ahead of me with a good level of expectancy given that I've
good level of expectancy given that I've understood the environmental context
understood the environmental context that we are in a bracketed environment,
that we are in a bracketed environment, not in a trend environment. So again,
not in a trend environment. So again, this is where environment context comes
this is where environment context comes into place and measuring measuring your
into place and measuring measuring your performance. And then like I said,
performance. And then like I said, forward testing real time. That's common
forward testing real time. That's common sense. Now that you've back tested it,
sense. Now that you've back tested it, you try it out in a simulated
you try it out in a simulated environment, a demo environment. Maybe
environment, a demo environment. Maybe you get a $100 account and just trade $1
you get a $100 account and just trade $1 trade position sizes over 30 trades over
trade position sizes over 30 trades over a two, three month period until you get
a two, three month period until you get confidence, right? Just like you would
confidence, right? Just like you would in a boxing ring. You go to a boxing
in a boxing ring. You go to a boxing academy, you're not going to step into a
academy, you're not going to step into a professional fight. You're going to have
professional fight. You're going to have many, many sparring rounds with uh other
many, many sparring rounds with uh other amateur boxers before you actually go
amateur boxers before you actually go into live environment. It's the same
into live environment. It's the same with trading.
with trading. >> Um, establish principle number 10. So
>> Um, establish principle number 10. So that was principle number nine, forward
that was principle number nine, forward test in real time. Principle number 10,
test in real time. Principle number 10, establish minimum sample size. Again, we
establish minimum sample size. Again, we we talked about, you know, collect at
we talked about, you know, collect at least 20 30 occurrences not of just the
least 20 30 occurrences not of just the trade strategy but of the execution as
trade strategy but of the execution as well around these edge zones where
well around these edge zones where you're looking to operate. Um to
you're looking to operate. Um to validate robustness in this trading
validate robustness in this trading strategy and trade execution.
strategy and trade execution. Um, point number 11 is then evaluate the
Um, point number 11 is then evaluate the strategy you fit. Assess whether the
strategy you fit. Assess whether the strategy matches your personality, your
strategy matches your personality, your strengths, your schedule, your
strengths, your schedule, your decision-m. Maybe you're a day trader.
decision-m. Maybe you're a day trader. Maybe you're a scalper. Maybe you rock
Maybe you're a scalper. Maybe you rock up to the desk and all you want to trade
up to the desk and all you want to trade is a New York session on Bitcoin or
is a New York session on Bitcoin or equities.
equities. Then focus on that time frame. Focus on
Then focus on that time frame. Focus on the window. There's no point in saying,
the window. There's no point in saying, "Oh, look, I've tested all these um, oh,
"Oh, look, I've tested all these um, oh, look, I found some brilliant edge." But
look, I found some brilliant edge." But that edge only ever happens in the Asia
that edge only ever happens in the Asia session. But you're you're turning up to
session. But you're you're turning up to this desk in the New York session.
this desk in the New York session. You're waiting waiting waiting and it
You're waiting waiting waiting and it doesn't happen.
doesn't happen. >> Well, does does that actual strategy fit
>> Well, does does that actual strategy fit you, your lifestyle, your personality?
you, your lifestyle, your personality? >> And what's the time what's the average
>> And what's the time what's the average time where this or what what is the time
time where this or what what is the time of the day that this execution sets up?
of the day that this execution sets up? Do you track that? Have you defined
Do you track that? Have you defined that? So again, all these are metrics
that? So again, all these are metrics that that I think are important to
that that I think are important to recognize when it comes to strategy
recognize when it comes to strategy creation. Um, and then point number 12,
creation. Um, and then point number 12, break the strategy into high, medium,
break the strategy into high, medium, and low quality versions so you know
and low quality versions so you know when to size up or size down. So
when to size up or size down. So remember, we talked about the A game,
remember, we talked about the A game, the B game, the C game.
the B game, the C game. >> Yeah.
>> Yeah. >> Well, if this is a strategy, but it's
>> Well, if this is a strategy, but it's falling into your C game. What do you
falling into your C game. What do you need to do then to get it into your B
need to do then to get it into your B game to eventually progress it into your
game to eventually progress it into your A game? It's going to take more
A game? It's going to take more training, more repetition, more back
training, more repetition, more back testing, then running it forward testing
testing, then running it forward testing because you've made those subtle
because you've made those subtle changes. Now you're looking to reenact
changes. Now you're looking to reenact those in a live environment. Um,
those in a live environment. Um, principle number 13, understand the
principle number 13, understand the reward structure. Determine whether the
reward structure. Determine whether the strategy relies on big winners or is it
strategy relies on big winners or is it frequent small wins or is it asymmetric
frequent small wins or is it asymmetric reward to risk profiles.
reward to risk profiles. >> 14, stress stress test the strategy. So
>> 14, stress stress test the strategy. So we talked about how does this perform in
we talked about how does this perform in a volatile environment. So we saw 10 10,
a volatile environment. So we saw 10 10, right? If you're looking to play, oh
right? If you're looking to play, oh look, price has come down to, you know,
look, price has come down to, you know, the third standard deviation of VWAP
the third standard deviation of VWAP bands. I'm going to long this and price
bands. I'm going to long this and price shifts through that level. Well, that's
shifts through that level. Well, that's [ __ ] trading because you failed to
[ __ ] trading because you failed to recognize that the the volatility shift.
recognize that the the volatility shift. >> Mhm.
>> Mhm. >> And so therefore your your strategy does
>> And so therefore your your strategy does not does not work in an environment
not does not work in an environment where the volatility reg volatility
where the volatility reg volatility regime has changed. Really what you
regime has changed. Really what you should be thinking is hang on a minute.
should be thinking is hang on a minute. I I shouldn't be looking for a VWAP mean
I I shouldn't be looking for a VWAP mean reversion strategy. This is a trend
reversion strategy. This is a trend strategy. I'm looking for continuation.
strategy. I'm looking for continuation. >> Mhm.
>> Mhm. >> So again that that's where you then can
>> So again that that's where you then can start thinking about. All right. So this
start thinking about. All right. So this actually fails in this environment. I I
actually fails in this environment. I I need to start thinking about a trend
need to start thinking about a trend continuation strategy now. And so it
continuation strategy now. And so it evolves. And then the last part
evolves. And then the last part build principle number 15. Build and
build principle number 15. Build and maintain a playbook
maintain a playbook that is basically a living document
that is basically a living document database
database of a given strategy. You've gone in the
of a given strategy. You've gone in the charts. you you you've you've collected
charts. you you you've you've collected a sample size of of 50 examples of of
a sample size of of 50 examples of of this execution or of this strategy
this execution or of this strategy playing out over and over and over
playing out over and over and over again. But not only that, as you forward
again. But not only that, as you forward test it, as you trade it in a live
test it, as you trade it in a live environment, you can only store so much
environment, you can only store so much in a journal.
in a journal. >> Mhm.
>> Mhm. >> But there's no reason why you can't tag
>> But there's no reason why you can't tag your trades in something like Evernote
your trades in something like Evernote or OneNote.
or OneNote. >> Mhm. and then use that tag in the
>> Mhm. and then use that tag in the Evernote and and also log that in your
Evernote and and also log that in your trade journal so that you can then
trade journal so that you can then reference that. All right, here's a
reference that. All right, here's a trade I took, trade ID number 1 2 3 4 5
trade I took, trade ID number 1 2 3 4 5 um and in my Everote it's trade ID 1 2 3
um and in my Everote it's trade ID 1 2 3 4 5 under this strategy name. You can
4 5 under this strategy name. You can now look at all the screenshots or
now look at all the screenshots or screen recordings that you took to
screen recordings that you took to review your performance just like a
review your performance just like a boxer, just like an MMA fighter. You've
boxer, just like an MMA fighter. You've just had a five five round fight, a 12
just had a five five round fight, a 12 round fight. Is that it? Are you just
round fight. Is that it? Are you just going to go into the next fight or are
going to go into the next fight or are you actually going to review your fight?
you actually going to review your fight? Are you going to replay back your fight
Are you going to replay back your fight to see how you performed, what you did
to see how you performed, what you did well, what you could do better? That's
well, what you could do better? That's how you improve. Not by taking more
how you improve. Not by taking more technical courses and joining more paid
technical courses and joining more paid groups and going to every trading
groups and going to every trading seminar. It's actually
seminar. It's actually >> doing the work that most of us to begin
>> doing the work that most of us to begin with never thought of doing or wanted to
with never thought of doing or wanted to do. And so for me
do. And so for me that is the the summary of everything
that is the the summary of everything you know throughout this process of
you know throughout this process of trading over the last 9 years. This is
trading over the last 9 years. This is where I've got to this is who I am as a
where I've got to this is who I am as a trader. This is how I approached
trader. This is how I approached trading. This is what I wish I knew when
trading. This is what I wish I knew when I started trading. Um and moving forward
I started trading. Um and moving forward this is the foundation of what I believe
this is the foundation of what I believe for myself.
for myself. You know I'm not saying that this is
You know I'm not saying that this is going to be the foundation for other
going to be the foundation for other people but again I'm just sharing my own
people but again I'm just sharing my own experiences as to this is what has been
experiences as to this is what has been key for me to get to where I am today.
key for me to get to where I am today. to go to that next level to get to the
to go to that next level to get to the highest level possible that I can
highest level possible that I can achieve before I walk away from this
achieve before I walk away from this game. So that that's what it comes down
game. So that that's what it comes down to for me.
>> Yeah, that makes sense. Thank you very much for
much for >> all good
>> all good >> all of that. That was very like it was
>> all of that. That was very like it was very different from what I usually do
very different from what I usually do here, but I'm very um I think it is very
here, but I'm very um I think it is very >> like you really gave the whole playbook
>> like you really gave the whole playbook from a really professional lens which is
from a really professional lens which is often quite underappreciated on CT I
often quite underappreciated on CT I feel like because um
feel like because um >> crypto also skews our perception of of
>> crypto also skews our perception of of trading what trading is a little bit um
trading what trading is a little bit um like with with meme coins mostly it's
like with with meme coins mostly it's just gambling and stuff like that but I
just gambling and stuff like that but I think you really did a good job in
think you really did a good job in putting together what it takes to be a
putting together what it takes to be a professional and long-term successful at
professional and long-term successful at trading and that it's more than just um
trading and that it's more than just um looking at charts, indicators, and
looking at charts, indicators, and whatever, but like really understanding
whatever, but like really understanding not only the market but yourself.
not only the market but yourself. >> No, I agree. And I think you're right in
>> No, I agree. And I think you're right in the sense where crypto kind of warps
the sense where crypto kind of warps your perception of trading. I think if I
your perception of trading. I think if I started trading equities
started trading equities effects or indices, I I think my
effects or indices, I I think my approach to trading would have been
approach to trading would have been different.
different. >> Yeah. Um because we come into the space
>> Yeah. Um because we come into the space of treading meme coins and altcoins and
of treading meme coins and altcoins and we see other people making [ __ ] ton of
we see other people making [ __ ] ton of money and it's it's circulating on
money and it's it's circulating on social media on Instagram, right? It's a
social media on Instagram, right? It's a oh I I want a bit of that too.
oh I I want a bit of that too. >> You know, so and so made $100,000. He
>> You know, so and so made $100,000. He only put 10K in, but he's made $100,000.
only put 10K in, but he's made $100,000. I'm going to buy 5,000 worth of Shea
I'm going to buy 5,000 worth of Shea Inu, right? Or Brett or whatever other
Inu, right? Or Brett or whatever other [ __ ] Um, and so we're just trying to
[ __ ] Um, and so we're just trying to replicate the success of others without
replicate the success of others without really appreciating that's not actually
really appreciating that's not actually trading. That's just pure speculative
trading. That's just pure speculative speculative gambling at best where the
speculative gambling at best where the chances are you're probably going to
chances are you're probably going to lose a lot of money doing that. Um, and
lose a lot of money doing that. Um, and so, you know, like I said, I I was one
so, you know, like I said, I I was one of those people. I used to marry the
of those people. I used to marry the fundamentals. I used to think every
fundamentals. I used to think every project that I bought in 2017 like
project that I bought in 2017 like Neolisk, Stratus,
Neolisk, Stratus, >> um is going to be
>> um is going to be >> gamechanging.
>> gamechanging. >> Yeah.
>> Yeah. >> Um
>> Um >> we've all been there.
>> we've all been there. >> So unfortunately, unfortunately that
>> So unfortunately, unfortunately that isn't the case. And then you come to
isn't the case. And then you come to realize that look, you know, I'm sure a
realize that look, you know, I'm sure a lot of people did very well on
lot of people did very well on memecoins, but that's not my strength.
memecoins, but that's not my strength. >> I know that my strength is everything
>> I know that my strength is everything I've worked hard towards over the last
I've worked hard towards over the last nine years now is coming to fruition
nine years now is coming to fruition over it's come to fruition over the last
over it's come to fruition over the last 2, three, four years. Yeah.
2, three, four years. Yeah. >> And I'm more excited now
>> And I'm more excited now about my performance as a trader. I'm
about my performance as a trader. I'm more excited about where I'm going to be
more excited about where I'm going to be in 3, four, 5 years time, knowing what I
in 3, four, 5 years time, knowing what I know now and continuously working on my
know now and continuously working on my game. And there's nothing that gives me
game. And there's nothing that gives me more
more joy than journaling my trades and
joy than journaling my trades and actually looking at my performance. It's
actually looking at my performance. It's like, like I said, you've just been into
like, like I said, you've just been into a fight into a UFC fight or you you've
a fight into a UFC fight or you you've been playing golf masters as a
been playing golf masters as a professional sports player or you've
professional sports player or you've just, you know, you whatever it is you
just, you know, you whatever it is you play football, you're a professional
play football, you're a professional footballer,
footballer, >> the chances are you're going to review
>> the chances are you're going to review and watch your own performance to see
and watch your own performance to see how you performed on that given match
how you performed on that given match day.
day. >> Yeah.
>> Yeah. >> On that fight day.
>> On that fight day. >> I see trading the same way. I I really
>> I see trading the same way. I I really enjoy looking back at like how I
enjoy looking back at like how I performed during this week and knowing
performed during this week and knowing that this one week is not going to
that this one week is not going to define me or change me. But if I've had
define me or change me. But if I've had a good week of trading, this is what I
a good week of trading, this is what I need to do for the next 1,000 weeks to
need to do for the next 1,000 weeks to get to the end goal of being a trader
get to the end goal of being a trader with positive expectancy with good risk
with positive expectancy with good risk management. I do not want to make a lot
management. I do not want to make a lot of money with huge draw downs in between
of money with huge draw downs in between like 30 40 50%. That to me is
like 30 40 50%. That to me is not really operating as a as a really
not really operating as a as a really professional trader. For me, I want to
professional trader. For me, I want to do it in a systematic way where I've got
do it in a systematic way where I've got very very clearly defined risk that if I
very very clearly defined risk that if I can do this with a $1,000 account, if I
can do this with a $1,000 account, if I can perform over a 100 trades on a on a
can perform over a 100 trades on a on a $1,000 account, I can probably do it
$1,000 account, I can probably do it with a $10,000 account or $100,000
with a $10,000 account or $100,000 account or a million dollar account
account or a million dollar account because I know that I'm looking at
because I know that I'm looking at percentages. I'm not looking at P&L. I'm
percentages. I'm not looking at P&L. I'm following a process that has worked for
following a process that has worked for me time and time and time and time again
me time and time and time and time again that I know I can scale this now as
that I know I can scale this now as opposed to getting to say high net worth
opposed to getting to say high net worth but with a lot of variance that every
but with a lot of variance that every time I take a trade I'm very much on
time I take a trade I'm very much on edge. I'm very nervous because
edge. I'm very nervous because >> I'm scared of taking a big loss but I
>> I'm scared of taking a big loss but I could take a big loss knowing how I I I
could take a big loss knowing how I I I don't really have a a systematic way of
don't really have a a systematic way of trading. So I think that that that's the
trading. So I think that that that's the realization once you realize that once
realization once you realize that once you start really thinking about the
you start really thinking about the probabilistic nature of trading thinking
probabilistic nature of trading thinking in mathematics or the mass of trading uh
in mathematics or the mass of trading uh and understanding edge and expectancy
and understanding edge and expectancy and and all the various components that
and and all the various components that I've discussed today it it really sets
I've discussed today it it really sets you off in in the right mindset moving
you off in in the right mindset moving forward that whatever you did before
forward that whatever you did before without a process wasn't doesn't mean
without a process wasn't doesn't mean [ __ ] You might be able to read a chart
[ __ ] You might be able to read a chart doesn't mean you can trade. You might be
doesn't mean you can trade. You might be an orderflow guru on footprints doesn't
an orderflow guru on footprints doesn't mean you can trade. You might be very
mean you can trade. You might be very good at psychology, but your share
good at psychology, but your share technical analysis doesn't mean you can
technical analysis doesn't mean you can trade. You know, you might be a very
trade. You know, you might be a very good risk manager because you only lose
good risk manager because you only lose small amounts, but but you haven't got
small amounts, but but you haven't got anything demonstrable that you've got
anything demonstrable that you've got positive edge.
positive edge. >> You're just a very good loser, but
>> You're just a very good loser, but you're not good at winning. So, every
you're not good at winning. So, every single facet comes together to hopefully
single facet comes together to hopefully evolve into continuously learning and
evolve into continuously learning and and evolving as a trader.
and evolving as a trader. I definitely really appreciate all of
I definitely really appreciate all of that as as someone that loves the the
that as as someone that loves the the art of trading and I feel like a lot of
art of trading and I feel like a lot of our listeners will also really
our listeners will also really appreciate and enjoy this episode. Um,
appreciate and enjoy this episode. Um, to wrap it up, do you have any any final
to wrap it up, do you have any any final words that you want to share with the
words that you want to share with the listeners, the watchers?
listeners, the watchers? I think I'm looking forward to the
I think I'm looking forward to the incilica terminal um using that more
incilica terminal um using that more often and I think that's that's a really
often and I think that's that's a really good way of of approaching trading
good way of of approaching trading because if you can play around with the
because if you can play around with the various execution strategies and if you
various execution strategies and if you can start journaling your trades, it
can start journaling your trades, it will start forcing you to think about
will start forcing you to think about trading in a different perspective as
trading in a different perspective as opposed to opening up your mobile phone
opposed to opening up your mobile phone >> and just punting on a trade. you won't
>> and just punting on a trade. you won't remember what you did two months time.
remember what you did two months time. But I think with a level of um
But I think with a level of um systematic
systematic uh purpose, having a process uh and
uh purpose, having a process uh and using the right tools for for trading,
using the right tools for for trading, you know, with a terminal, with a
you know, with a terminal, with a journal,
journal, >> um with a with a framework, then then
>> um with a with a framework, then then hopefully it'll it'll help you step
hopefully it'll it'll help you step towards the direction that you wish to
towards the direction that you wish to progress in.
progress in. >> Yeah. Thank you very much for for coming
>> Yeah. Thank you very much for for coming on today. Thank you for
on today. Thank you for >> Thank you
>> Thank you >> explaining everything and
>> explaining everything and bye.
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