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The 10-Minute Talk That Will Make You An ALPHA Trader (Habits, Mindset & Motivation) - YouTube
Channel: The Secret Mindset
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Hello and welcome.
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Today I鈥檓 sharing my trading experience,
what trading is all about, some of its complexities
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and how your approach should be when day trading.
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So if you could, like, subscribe to the channel,
and stick around for the full video.
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Technical indicators are inherently lagging
so they cannot be relied upon on their own.
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Most new traders start with indicators.
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That鈥檚 the first step in day trading.
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In my first 2 years in trading, price action
didn鈥檛 matter to me because I was relying
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on a random set of lagging indicators to make
decisions for me.
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The truth is I was being lazy, hoping that
I鈥檇 stumble across some magical combination
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of indicators that would make me wealthy.
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I was just making decisions because a few
dots and lines said it was time to buy or
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sell.
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But to rely 100% on them without first learning
how to read price action is a major mistake.
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Don鈥檛 get me wrong.
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I鈥檓 not saying all indicators are bad or
that traders who use them are wrong to do
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so.
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I also use trading indicators, but price action
comes first.
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Before you apply any indicator to the chart,
you first need to understand price action.
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Even If you feel that indicators are the way
to go, that鈥檚 okay.
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Just be sure to spend some time learning how
to read price action.
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It鈥檒l help you in the long run even if you
decide to use an indicator-based strategy.
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If a trade doesn鈥檛 let you sleep, you are
not trading correctly
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A simple rule you should apply is to think
about your sleep.
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If you are able to place a trade, set the
appropriate stop loss and take profit orders
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in your platform, and then go to sleep, this
is the trade size that fits your risk profile.
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If, however, when you place a trade you find
it difficult to sleep, you find that you are
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always thinking about the trade while away
from your computer, that you feel the urge
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to constantly check your smartphone, then
the trade is too big.
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That鈥檚 a common mistake.
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When people are new to trading, they tend
to feel pressure throughout the day and especially
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when a trade is open.
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You need to reduce your trading to the sleeping
point, the point at which you can place a
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trade, accept the risk, and have a peaceful
state of mind.
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Although trading risk is important, your emotional
and mental health risks are more important.
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The first and most important way to control
stress levels with regards to trading, is
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to control your position sizes.
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You will find yourself remarkably less stressed
if you keep your percentage at risk on each
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trade lower.
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Always watch more than one time-frame.
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Zoom out to see the bigger picture.
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Day trading is considered a riskier alternative
to the more traditional investing or swing
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trading.
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When trading short timeframes, it is not enough
to simply analyze one time frame.
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Sometimes there is very little time to catch
the perfect moment to enter and if you are
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late even a little bit, you won鈥檛 be able
to take advantage of the price movement.
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If you see a good trade on an M15 chart, see
how it looks on the hourly chart and H4 too.
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Zoom out to see the bigger picture.
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Sometimes an opportunity may be less obvious
on a smaller chart timeframe and more obvious
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if you zoom out and look at the bigger picture,
and vice versa.
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Sometimes a move on a 10-minute chart can
look so scary; but when you step back, it鈥檚
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very minor when viewed on a daily time frame.
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Evaluating a market on different timeframes
will help confirm a trend and make a better
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informed decisions.
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Never make a trade, change your mind for little
to no reason and take it off
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Here鈥檚 a familiar experience.
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You analyze a chart for some time, you see
a decent trade, you pull the trigger, confident
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that your analysis will pay off, and after
5 minutes, when you鈥檙e down a few points,
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you close your position.
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When day trading, emotions will come from
market noises coming your way.
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Whether markets are in an uptrend or downtrend,
you will witness a lot of noise.
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And noise can impact your trading strategy
and decisions.
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So, you must filter it to keep your emotions
under control.
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The lesson is to always give your trades enough
time to come good.
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If you often engage in emotional exits, this
will only destroy your confidence and eat
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into your profits
This doesn鈥檛 mean you can鈥檛 change your
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mind when new information comes in.
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If a support level is broken for example,
or a huge pin bar forms on high volume.
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This should all be considered in your plan.
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Always question yourself as to whether your
decisions are emotionally driven or are backed
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by technicals or fundamentals.
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Learn all you can about the Kelly Formula.
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This is the mathematical answer to how much
you should risk on a trade.
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The reality is that even a wildly profitable
system will go bust if your risk is too big.
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The Kelly criterion is an advanced money management
tool that helps you work out how much money
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you can risk on each new trading position,
based on how well you have done with similar
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trades in the past.
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Calculating the Kelly criterion is relatively
simple and relies on two basic components:
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your trading strategy's win percentage probability
and its win to loss ratio.
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These will help you arrive at a number called
the Kelly percentage.
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This gives you a guide to what percentage
of your trading account is the maximum amount
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you should risk on any given trade.
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Kelly formula is probably the best money management
tool for judging position sizes and risk tolerance
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in trading.
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You don鈥檛 need to trade.
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If the market is quiet or behaving strangely,
just wait it out.
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If you find yourself jumping into low conviction
trades because you can鈥檛 find anything better,
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the most likely reason is that you need to
do more work.
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Spend less time looking at charts and more
time researching, reading, back testing and
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analyzing.
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If you take more trades than your strategy
dictates, that鈥檚 a warning sign.
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This is often a result of boredom or lack
of discipline.
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Since these trades occur outside of your trading
plan, they are less likely to perform well.
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So trade what your strategy dictates.
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If the market is quiet or the trade entry
conditions are not there, just wait out.
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A new opportunity always comes along.
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You only need a few big trades to have a green
week.
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Learn to plan and structure every trade so
that you know what to do in any eventuality.
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You need to make a specific plan regarding
when you鈥檒l enter and exit a trade.
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Decide which signals will be your green light
to enter.
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Consider what you鈥檒l do if a trade starts
going against you.
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What鈥檚 your stop loss?
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When will you get out if things don鈥檛 go
your way?
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How much of your portfolio should you risk
on one trade?
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What you鈥檒l do if the market doesn鈥檛 move
and you鈥檙e stuck in the trade.
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What you鈥檒l do when you鈥檙e in profit?
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You need to plan and structure every trade
so that you know what to do in any scenario.
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Your trading plan should be complicated enough
to be effective, but simple enough to make
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snap decisions.
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If you have 20 conditions that must be met
and many are subjective, you will find it
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difficult (if not impossible) to actually
make trades.
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More hours does not mean more profit.
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Sitting in front of a screen for many hours
can lead to diminishing returns and burnout.
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Sitting in front of a computer screen all
day, watching the price action, might sound
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like fun, but I have found it can also be
a detriment to my performance.
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There is no another job in the world that
will take money from you by trading your time.
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You can make thousands of dollars in a few
seconds.
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But you can also trade for 7 hours and lose
a lot of capital.
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The market doesn鈥檛 care how much time you
are trading for.
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Day trading is often chaotic and full of stress.
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It鈥檚 so easy to lose your ability to concentrate.
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You can be highly motivated to day trade and
have a decent strategy, but if you lack concentration,
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you鈥檒l have big problems.
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When day trading, it鈥檚 essential that you
learn to concentrate while executing a trade
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and monitor the market action during a trade.
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It鈥檚 useful to remember that concentration
takes psychological energy and your energy
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has its limits.
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If you want to maintain your focus, you must
be rested and relaxed.
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Four hours of concentrated trading or research
is usually the limit for most people.
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Don鈥檛 overdo it.
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More hours does not mean more profit.
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Value your time.
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You don鈥檛 have to spend all day trading.
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Don鈥檛 quit your job to become a full time
trader.
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Don鈥檛 start with the intention of trading
for regular income.
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Day trading is not something that should be
taken lightly.
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It takes years of building up knowledge and
experience.
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I get triggered when I see influencers on
different platforms telling people to quit
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their jobs to day trade stocks or crypto,
showing off their expensive cars and luxurious
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life style.
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You can鈥檛 simply walk out of your day job
to start trading.
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There are many traders that are successful
and have full-time jobs.
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Remember, in trading, you do not have a set
salary.
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The market owes you nothing, your winning
strategy might stop working in a year.
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And your mistakes have big consequences in
trading.
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You don鈥檛 know how much money you will make
or lose before any given trading day.
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This is the most important piece of advice
I can give to 9-5 traders.
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Do NOT give up your primary source of income.
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In general, you don鈥檛 want to lose streams
of income.
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The more streams of income you have, the more
stability you have.
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Better income stability will allow you to
trade better, as you view the market with
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less emotional attachment to money!
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Keep your job as long as you can while you
build up your trading skill-set.
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Don鈥檛 rush the process.
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Don鈥檛 believe anything you read until you
have tested and tried it out for yourself.
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What used to work ten years ago, on a certain
market, may not work today.
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A strategy I use on the H4 time frame on Tesla
may not work for you on a 5-min chart of Bitcoin.
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That鈥檚 a common mistake amongst new traders.
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They don鈥檛 understand that different strategies
work on different markets.
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You only find out what works for you by rigorous
testing and analysis.
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Back testing is the most under-utilized weapon
in trading.
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Many traders find it to be boring, difficult,
and even pointless.
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But back testing allows you to witness how
your plan would have theoretically performed
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had you been trading it for the past months.
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With this information you can objectively
confirm whether or not your trading plan will
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make you money.
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Backtesting is like a mirror to reality.
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You might have the best trading idea, but
if you backtest it over the past few months
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and it鈥檚 not profitable, chances are this
strategy isn鈥檛 going to suddenly start working
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now.
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Likewise if you come up with a clever idea
that you think probably doesn鈥檛 work, you
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may surprise yourself to discover through
your back testing that it in fact does work.
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Of course, the past is never an indication
of the future, or at least not a consistently
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reliable one.
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But without back testing you are essentially
trading blind.
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If you found value and learned something new,
leave us a like.
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This way we鈥檒l know if you'd like to see
more videos like this one.
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And check out our academy program if you want
to further level up your trading.
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Until next time.
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