Transcription
All right, so we're back. Video two. So, we got a lot to cover here.
Now, one of the things that I hear all the time at the frustrated implement level, and this might be you, is people will often say to me, "I just need a strategy, Ally." Um, they've been out looking at different stuff on the internet. They've tried lots of different things, and you know, they they bought into a new super duper system.
And I see this all the time because I was actually at one of the big uh big shows, London Forex show. I was asked to speak and do a round round table there. So I was down there and it had probably been about 6 years since I'd been and I remember standing in the main hall and I was looking around and I was thinking, well, exactly the same thing is happening from six years ago and then the first show I went to, which was probably six, seven, eight years before that. So essentially 15 or so years ago where the majority of people were hanging around the stand that had a automated system that had loads of complex algorithms and talked about everything that that was going on behind it. And I thought, isn't it interesting that although the technology has shifted slightly, um, it's the same thing. People would always move and be would would would move towards and be lured in by the complex system that to essentially claim to take them out of the loop and had some 85% win loss ratio. You know, they're winning 85% of the time.
Because what's happening is two things. Traders are moving towards the thing that seems the easiest and can give them the the biggest win. When in fact, if you actually look at what the successful traders are doing, remember 80% of traders are losing the majority of the time. So 20% that are winning are the ones that have got very, very simple but effective strategies. They stick to them, but a lot of the time what's happening is they're not worried about winning all the time. And a lot of what can be creating frustration for you is you're trying to find that system that works 80, 90% of the time. But if you can actually own the way that you trade through analysis and through strategy, what happens is that will allow you to be consistent.
So the reason I know that question comes up, Ally, "I just I just need a strategy," it's twofold. Is because the strategies that you've tried have either underdelivered or claimed a specific win-loss ratio that you can achieve, which isn't true, or you just can't quite do it because you're like, "Well, I'm trying to cobble this with this and I just need your, just give me your strategies. Just give me your your your your system and I'll be I'll be successful."
Well, here's the important bit. You've got to understand what a strategy is. Now, in terms of how we define a strategy, the strategy is just the repeatable entry element of what you do. The system is the analysis, the strategy, the risk management, the data, the journaling, and the mindset. But what is going to get you out of this level and move you into level four and then on to level five and six is what we call ownership. So when people say that it is true for a lot of people, they are missing elements of a strategy, a system, or an entire system that they know is that they know is proven, but also what they're missing is feedback because it's one thing having a system or a strategy, but you have to be able to deliver on that. And the risk is if you bring all your biases, your cognitive biases, recency bias, confirmation bias, hindsight bias, that can mean that the system's perfectly okay. But what's actually happening is you're not able to deliver on it because you may have specific patterns that you are running because you're more fear-based or you're more greed-based. It was the same as me. I had a perfectly successful system that I had access to. But what I was doing until I logged the data was a load of the time I was actually trading that very, very subtly incorrectly because I had the overriding want and desire. I had what's called a greed-based tendency to try and win my win my money back. So the same thing can apply here. So actually, what you need is, yes, you need a system, but you also need feedback loops to be able to do that effectively, which we're going to talk about in this video as well.
So what I wanted to do is just reiterate and talk a little bit about the analysis and strategy elements that you will have seen if you watched the uh the second video in the level below, at essentially the uh the avid learner phase. And the problem at the avid learner phase is you're learning essentially learning too much and trying to cobble things together. And that can still be the case here for you, but the the difference is is you're actually trying to implement that and put it into practice, which creates even more frustration. You're not you're not hiding behind the learning, and that's where the frustration is coming out.
So the idea being is when we look at analysis, the key thing to take away from analysis is we are analyzing the territory. We are analyzing the area, and our goal when we do that is to map the landscape. I'm just going to write that up there. So, we map out the landscape using three core tools: support and resistance, trend lines, and momentum. It doesn't mean there aren't other tools that traders I work with add in onto that, but they get skillful and competent at those three first.
Because what you want to be able to do is not be sitting there and reliant and saying, "I hope my system wins 80% of the time." Or the opposite is get so fixed in because you learn a simple pullback strategy that said when price makes a new high, pulls back to a moving average, does a super duper candle pattern, then you go long. And the problem with that is you're hyperfocused on that particular entry, or you look for a specific consolidation pattern, an ascending triangle or a neutral consolidation. And when that occurs in the market, you go long, or the opposite, you go short. The problem is there will be times, you can see here, there's a consolidation pattern right there that it works out. But there will be other points in the move where the consolidation pattern occurs and price comes back down, or the consolidation pattern occurs and it comes back up, and you lose. And then you start thinking, "That doesn't work." But it could be one that that trade was just meant to lose anyway because you're still, despite using a system like ours and you're using that analysis and strategy process, you're still going to have losing trades. Or it could be that you're trading the setup, but it's in the wrong part of the map. So you're just essentially trading the wrong way for the condition that market's in.
So this is why the discretionary analysis framework, as we call it, or the discretionary analysis process is so important because what you're doing, and the phrase I like to use is, you're teeing up every well where you're analyzing every different market and you're teeing up the market condition. And the key one is, and this is where you have to be able to sit back and go, "Is that market in a no man's land condition?" Is it essentially not meeting one of the three specific market conditions that we look for? With the trend, against the trend, and trend line break. And a trend line break condition is really a subset, a more cautious version of an against the trend condition.
So the important thing here, and this is what happens once you move into level four, is your goal is not to trade all the entries in this condition, this condition, in this condition. It's to first get good at identifying each of these three conditions and then deciding whether or not certain conditions appeal more to you. You just like trading with the trend more than you do against the trend, or not just what appeals to you, what you like, but also what you're good at seeing. And there'll be a correlation to that because we tend to like things we're good at doing. So if you're good at seeing a trend line break condition, you like the trend line break condition, you would probably start with specific strategy criteria that meet that. So we have a set of strategy criteria that are relevant only for setups in a trend line break condition because we've tested them and we've traded them. So your focus will be to do the same thing. If you start liking trades where markets are breaking trend lines, very specific way that we have of drawing trend lines, then that could be the specific area that you like trading the most in that particular zone there. If you prefer trading more with the trend, which is this area here, I'll draw that in pink. So, it's a different color. You may focus more on trading when the markets are in key with the trend areas.
So then what that does is it allows you to specialize very early on, knowing that the data that you're recording about that, the data you have access to, is able to show you that what you're trading has a consistent profitable edge over a period of time. But the nice thing about this process is markets are essentially going to be moving sideways, as you can see here, or trending down, or trending up with specific movements and patterns within that. I mentioned this in the previous video with a sideways moving market. There's often a very choppy period in the middle. I've drawn that a little bit bigger, but you can see it through there. And on a lot of occasions, that's where you don't want to be trading unless the pattern is very specific. So markets are forever going to be going sideways, or trending up, or trending down. So a system like this that identifies the appropriate areas in any of those moves, against the trend, with the trend, trend line break, or no man's land, which means you don't trade. The system that identifies those three areas is going to continue to work. Yes, there's going to be periods where it works exceptionally well. There may be a period where you have a little bit of a draw down, but overall, that system is going to continue working because it's not so hyperfocused and finite that all that has to happen is markets have to increase their ATR over a six-month period and suddenly you've not got the setups you want anymore because the ABC criteria in terms of where you enter that will be reflective of what is going on. Because the one thing that is important is if you're going to have price needs to do XYZ before you trade, you want to make sure that that factors in relevant specific criteria.
Now, so the key thing with analysis and strategy is keep it simple. As I've said, start with a couple of specific tools, uh, support resistance, have a process to how you do that. Trend lines, have a specific process to how you draw trend lines. And then momentum, how you identify momentum. And that will allow you to then be able to identify when markets are ex at extremes, which is the against the trend element. When markets are trending and have momentum and are outside of the choppy periods, that is called with the trend. And then when markets are changing direction and having a trend line break after already coming off a level, that again is another area to focus on. And again, you don't have to trade all of these. You just need to say, "Right, I'm going to master one of these. I'm going to focus on with the trend. I'm going to focus on trend line breaking. I'm going to focus against the trend." A lot of people out there will tell you trading against the trend is risky. Well, it's only risky if you're doing it at random places and you don't have the data to back up the the result. But you might say, "I know that Alli, but I just don't like the idea, even though there's a support and resistance there, of going counter trend." Okay. Well, you might be happy to wait and do that once the trend line break has occurred. That's how I focus on trading. So, I look very much for trend line breaks, but I'm not just drawing trend lines on a market randomly and going, "There's a trend line break, I'm going short." And then the market goes down, there's a trend line, I'm going long. It has to occur in a specific place. I.e., trend line breaks occur after price has come off a clear level. It's on the edge of that territory. If it doesn't come off that level and goes higher, well, fine. I'll look for another market that's in that condition. If there's nothing happening that week, I don't trade. If the next week there are three of those trades setting up, I trade all three. So that's the process that I work to.
All right, so that's analysis and strategy with risk management. Really, it's all about, like I've said, don't fall into the trap of starting to move stops, thinking you're doing it logically, but it's just all about relief. So don't go into that scenario where you start moving stops or you are changing the amount you risk per trade. I'm not going to go over what I covered in video one, but for risk management, that's key.
So, when it comes to data, what are you looking to do? Now, if you're not into spreadsheets, you're not into logging your data, or the idea of a spreadsheet scares you, don't be scared by this sheet. I'm going to go through some key things here that are vitally important that you do. All right. So, the first thing you want to make sure you do when you're logging anything is make sure you log down the strategy that you are trading. If you've defined your strategy, log that strategy down in terms of what it is because you might be trading multiple strategies. Further down the line, you might want to trade more than one strategy. So, make sure you're doing that. Again, time frame wise, what's the specific time frame that you enter the trade on? Here's a really important point. We may do our analysis on multiple time frames to determine what condition that market's in, but the entry criteria come off one time frame. It might be a 4-hour, it might be a daily. If you're day trading, I'm only showing you some of the swing trade examples here. If you're day trading, then the focus for you at that particular time might be a lower time frame. That's fine, okay? But make sure you log the time frame. What's the market? Okay, log down what specific market is. If you're only trading one market, still log it down. You may expand that to more than one market further down the line. For us swing traders, we're trading multiple markets. So, it's important that we log down what market we're trading. Entry date and exit date. The entry date and the exit date will give you a very important metric, which is the number of days, number of hours, the period of time that you're in that trade for. Because one of the key things to look, you can see here with some of these trades, I'm in that trade for 10 days, I'm in that trade for 5 days, I'm in that trade, that trade was over and done with within no days. So, a matter of hours, some are eight. So yes, I can create an average figure here and say I'm on average I'm in a trade for five days, but it can easily be less than that or more than that. Well, one of the things that will affect your mindset is the time you're in a trade. Doesn't matter if it's a day trade, doesn't matter if it's a swing trade. And knowing what to expect, but not just looking at the average, seeing the random nature of that means you don't start getting jittery or panicky if you've been in a trade for five days and it hasn't reached your target. So that's really key. Obviously entry price, stop price, and target price will give you what we call your R value. So if you look at the particular trades that you can see here, if you look through here, you can see the losing trades are in in red. The winning trades are in green. What you'll notice is for these particular strategies, the R value on the win is twice as much as on the loss. So you can see that's a 2 to one winner. A two to one winner. A two to one winner. You can see that. So through this period here, if you look, what we've got is we've actually got a total R value of 20. So if you were risking 1%, that would be a 20% return. If you're risking 2%, that'd be a 40% return. And as you can see, not only are we winning more than we are losing in terms of the R value, that's a nice period of profitability because we've also got more winners than losers. But that's not always going to be the case. You can see here, look, we go through a period. The next period here, look, we're actually sitting there on a total of 13 trades. 1, 2, 3, 4, 5, 6, seven of those trades are losers. We've got a couple of break evens. But the smaller amount of winners, because they are winning twice as much as I'm losing, and that's proven, and that's the right R value for that strategy. I'm not just guessing at that. That has allowed us to go through a poor win-loss period, but it's actually meant that we're only we're only really, for sake of argument, at break even almost at 1%. So that's the thing that's important is you're going to have periods. Look, then you get another sticky period. So you're going to have sticky periods, and that can be two weeks of day trading results, or as you can see here, it can be two or three months of swing trading results. So this is the other thing that's important. The other thing that will help you get to level four and then move on from that is realizing that you can be doing everything right, and I can be working with a trader, and if they come in at this point here, by this point here, they're down minus 5R, but they've done everything right. That's purely the fact that they started trading on the 3rd of February instead of starting trading on the 20th of Jan. That could just be the fact that they came and joined us right at a certain point. They're doing everything right, but they've hit a losing period. They weren't in that little sweet spot. Now, in scenarios like that, especially for you, if you're out there and you don't realize that contextually relative to the data, what's going to happen is that frustration is going to come back up. So, you're going to be implementing in a frustrated, fearful, angry way. Or you might start going, "This, I need to get some of these losses back." So, you start overleveraging at that point. Or you think, "Well, this strategy is a load of rubbish." But the fact that those particular traders, if they came in at that point, they could see the previous data, but they can also work and get the feedback on that, that means they're not going to bail on it. They're doing everything right. It's just that the strategy is going through a poor period, a poor month, or a day trade, or a poor couple of days, or a poor week. That is going to happen. That's the reality that you're not getting shown and you're not dealing at that level of depth with most of the stuff that's out there. And that can be the thing that's preventing you moving forward. So understanding all of that from a data-oriented point point of view is really important. Logging different R values so you can cross-reference that on your particular strategy. That's also important as well. There's lots of other things that you can can log, but they're the key things. The trade number, and I would also say take a screenshot so you've always got an active screenshot at the point of entry, or at least as close to entry as possible. The strategy, the time frame, the market, the entry and exit date. So, you can log the um you can log the time you're in your trade. If you're a day trader, then you want to log it basically by hour so you can see what hours perform better. Entry price and exit price. And you're really logging your stop-loss price to be able to work out the R value. It's not so much that it matters what the price is. It's a good reference point. But if you've got the if you've got the um screenshot and you've got those numbers in your broker, that's okay. What you actually want to know is, was the trade a winner or a loser? And you can see it here in terms of the color. You don't have to do it like that. You can just put win/loss. And then what was the R value? The reason you're logging the entry price, the stop price, and the target price is you want to know the R value of the trade. That's a phrase that I want you to have etched in your mind going forward: "What's the R value of the strategy? What's the optimum R value?" And then you can start to play around with these and you can say, "Right, what if I record a three-hour trade? Is that better? Does it is it more profitable, but I have more losers? Or is you get to a point where the strategy doesn't work if you try and run it for three R? It's better running it at 2 R." So all of these things you can start to do because then what you're doing is you're building up data, assuming you're doing everything right with your risk. Yes, there's going to be some of the analysis and strategy that will need tweaking, but if you can start doing that and building up this data, you're building up information about what you trade.
And then from a journaling point of view, really, all you want to do specifically with journaling is just start thinking about journaling from three elements. And this is what I'll do when I'm working with traders on a regular basis. What I want to know from that trader is I want to know how they are operating pre-trade, during the trade, and post-trade. So what you can do is very simply, you can do this on a on a spreadsheet. You can log this in a diary. But what you don't want to do, and especially for a lot of guys out there, they'll struggle to log down how they're feeling and they won't want to they won't want to log when they're breaking rules, which I'm going to come to in a second. But if you can start initially just to say, "Right, okay, what what am I feeling pre-trade?" So what are the emotions that are coming up? Are they more fear-based? Are they more greed-based? What is it that's coming up? And really, just use a form of shorthand. So don't try and write long-winded sentences because it's going to be very difficult. And if you're day trading, you want to be focused on taking the trade. You don't want to necessarily be trying to log down lots of different information. And then you can start to look at the intensity of that emotion and you can say, "Right, so you're feeling a bit of fear pre-trade, and does that intensity of that emotion go up? And then as a result, does that fear then pass over to when you're in the trade, and do you start to then move your stop or do things like that?" So you're logging down what you're doing and what you're feeling. So that's the easiest way to think about it. What are you doing? So, are you doing things that you shouldn't or should be doing? And what are you feeling? And do do you get a sense of relief immediately after moving that stop? Well, that could be a pattern that you're running, and you know that you shouldn't be doing that. And then do you feel a sense of regret post-trade because price came down, hit your stop at break-even, and then went all the way on to hit your target? So, it's little things like that. What are you doing? What are you feeling? And then you can start to see whether those things are different, different emotions, different actions pre-during and post. And often, if there's a fear coming in pre-trade, it could be because previously the pro previous trade was a loser, and you can see that there were two losers prior to that. So your level of fear goes up about executing on the trade the more losers you have. And also, are you starting to look for things that you normally wouldn't use? Is you're looking for extra confirmation within your analysis and strategy process that's not part of your rules. But if you haven't got a set of rules, you can't compare those back. So this is where journaling becomes very useful, but only if you're doing the analysis, the strategy, and the risk management along with getting the hard data that I talked about a little bit earlier in this video.
Now, on to mindset. Uh, in terms of mindset, yes, mindset is critical, and all the things I'm telling you uh to implement here with with data and with journaling are going to have a direct impact on the quality of your mindset. The goal with your trading mindset number one is to be disciplined. So ultimately, regardless of what you're feeling, if you can stick to your rules, then there is an element of being able to be disciplined in your application regardless of how you're feeling. And all traders need to do that. Remember, at the moment, usually at this level, the emotions are increased because you're feeling frustrated, angry, annoyed, downtrodden, downbeat, whatever the emotion is that you're feeling, somber. Uh, it's usually a negative emotion that usually gets exacerbated by what happens with your trade. So, the goal is to be as neutral as possible emotionally about your previous trades and about the trade you're going into. But saying that as as the goal and actually doing it are two different things. So yes, initially, can you be disciplined? But ultimately, the reason why you're recording all of this data in this journaling is to see where that discipline slips and what are the triggers for that. So the first thing there is to create that awareness. So then you can improve upon your discipline. What I'm going to talk about in the next step and the one after, so levels four and five, is more about how you can really manage your emotions effectively. So assuming you've got the strategy, the analysis, the risk management in place and you're doing everything right, the goal is then to minimize the emotional response that you have. Because the problem can be is if you are literally being disciplined through gritted teeth, like your emotions are all over the place. And I've worked with traders that on the face of it look very disciplined. But when I've studied their their journaling notes, I can see that there are certain times that when things get more stressful, there's more stress applied. They're going through a very, very successful period because that can be stressful. It can be enjoyable, but it can still be stressful. Going through a losing period. That's when the discipline either either falters, or that's when it's much harder for them to maintain an emotional balance, which means their levels of fatigue go up, and then they're more likely to make poor decisions, bad decisions, or start to feel dejected, tired, and then that impacts their performance. I mean, we're getting into much more detail there, but that essentially is where mindset goes. But again, all of that can be optimized if you're doing everything right first. But the fundamental thing for you, if you're doing everything right, you got access to the data, the key thing, as I said in the previous video, is to increase your time and space horizon. Focus on increasing the time in which you look at what you're doing. Yes, when you have an individual trade, you've got to be focused and diligent to make sure you've done everything right on that trade. But the way to think about space and time horizon is think about each trade on the horizon. So, none of you listening to this are in it for two months. You want to be a successful trader for as long as you possibly can. You might be looking at 10, 20, 30 years that you want to be doing this. Well, if we take a 10-year time horizon and we think about the horizon. Imagine we're looking at the sea. We're set here and we're looking at a 10-year time horizon. That's going to be a bigger expanse than if we're looking at a two-day time horizon. So, suddenly every individual trade becomes a much smaller dot on a 10-year time horizon than it does on a 10-week time horizon. Yet the problem is is most traders want to be in the game for 10 years, but they're acting in terms of their emotional response and what they do and don't do. They're only going to be in the game for 10 weeks and they're reactionary and they're up and down and they change things based on the fact of what's happened sometimes only in 10 days. So the point is to be able to take that individual trade when you need to bring it to the forefront of your mind, focus in on it, do what's required, stick to your rules, but then have the ability once the trade is placed to be affected by it as if it was so far in the distance, it was a tiny little dot on that 10 or 20 or 30 year time horizon. So that's what I want you thinking here. Don't focus, don't hyperfocus on mindset at the expense of analysis, strategy, risk, and data and journaling, but start to use this mental framework about how you approach your trades. And if you're not breaking rules and not moving stops randomly, and you understand that your system has got an edge and the strategy you're trading is proven and you've got a feedback loop going on there, and all of that's in place, that is going to be much easier to to build this longer space and time horizon framework than it is if you don't have those things in place.
Okay. So, signs that you're doing well at this level and essentially moving into level four. Now, what I would say at this point um is make sure that you go and watch level four. You want to watch the level below you and the level above you. But level four is critical because that's really the turning point when things start to really, really fall into place. So firstly and most importantly, I'm trading consistently, even if at times it's still a little bit messy. So I'm executing consistently. I'm managing my risk effectively. I've now got a decent element of a strategy and an analysis process. I'm not hyperfocused on having too broad analysis system, or I'm not too focused on just the entry criteria. And I've worked with traders that have come to me that are doing the the broad analysis. They've got too much analysis. They're looking at ICT, supply and demand, all these different things. They've learned so much. It's all too broad. But then I've got somebody else that's kind of chucked that all out the window. And then now they're only focusing on the absolute entry criteria and they're too hyperfocused. So get those right and get consistent at applying them. Yes, it will still be messy. There'll be times it's not working out. But if you're moving in the direction where it's more consistent than messy, you're moving into the right area. And as I've already said, I'm managing risk most of the time. I'm not expecting you to be perfect. I wouldn't even expect that at level four, but you are managing risk effectively most of the time. And what that allows you to do is when things don't go your way, you're not going to lose, you know, you're not going to lose your account. You started tracking your trades, even if it's basic, even if you're just doing the core elements. You if you were a trader that in six months time we're recording the basic information, you will be ahead of 95% of the traders that are out there. Most traders are not tracking a thing. So start tracking your trades. That's a sign you've been doing well, and your strategy has clear entry rules. You might still be crafting it. You might need some feedback on it, but you're starting to have a clear set of entry rules and you are following those.
Now, things to watch out for. Thinking that your current approach is a strategy. You might be sitting here going, "Oh, yeah, but I've got a strategy, Alli." But is it a strategy? Is it proven? Does it actually work? Does it meet a set of criteria? Have you tested it? So, be careful of thinking your strategy might just be a couple of entry criteria that you trade on random markets that you've never tested. So, think of strategy not just as the entry criteria. In this case, think of it as the analysis process. Really, the word I should have put there is system. Thinking that your current approach is actually a system, but actually it's only elements of a system. Another thing to watch out, reacting to every trade and tweaking things consistently, thinking that you're optimizing. The problem here is without that feedback loop, it can be very easy for you to fiddle with lots of different things, and you're constantly changing out of fear or false hope, but actually what you're doing, you're just reacting to the trade results you've got, or you're trying to rid yourself of fear and falsely create a system that has a 90% win-loss ratio. Essentially, a lot of what goes on at this level is people searching for the holy grail. And often that is driven by the fear of not wanting to lose, or this this strategy, this perfect system that's winning all the time. And it's got a high, you know, it's got a 3 to one R value. So, you're winning three, you know, it's a reward to risk of 3 to one, and you're winning 95% of the time. You're probably being unrealistic and being still being lured in by the information and the hype and the BS that's out there. So be careful of reacting to every trade and twinking thing tweaking things all the time, but also through that holy grail scenario, going back to random content that doesn't have any feedback in the hope that you're going to find this this this holy grail of systems or strategies. And then here, another one that's really interesting, believing that working harder or grinding more will fix things. Now, the fact that you're here at this point means that you have stuck it out. You've probably been through some ups and downs, and I applaud you for that. But what's key is it's just working harder. There is not going to be the solution here. It's about creating feedback loops, which I'm going to talk about in a second.
All right. Now, keys to success. Everything should be streamlined, proven, and tracked. The chances are you've probably got too many things or too much complexity. Some people, that's not the case, but the majority of people at this stage, and you may well be this, is you have uh you've got too many things in your analysis and strategy process. It probably needs to be streamlined. Doesn't necessarily mean it needs to be simplified. It doesn't always have to be, you know, absolute basics, but if you're not mastering basic analysis and you've streamlined your entry criteria, you've probably got too much going on in one place. So, streamline it. Make sure it's proven and you're tracking it. Then it says here, stop reacting to short-term outcomes. Keep that bigger picture, longer space and time horizon in your mind. Focus on one system, not one indicator. Don't go the other way and hyperfocus on one indicator being the solution because it's got some wonderful AI something or other behind it, or somebody's been working on it for a gazillion years, or there's a team of 25 people and it was something that NASA did, or something that this person did, and it's amazing and it's going to do this, and it's only literally a green light or a red light telling you to buy or sell. Yeah, that's where you've become too hyperfocused on that little entry element, and it's not an entire system. So focus on one entire system that's got analysis, strategy, risk, data, journaling, and mindset on top of that as well. Make sure the system is simple enough for you to execute. It's not overly complicated, but not one element. I see traders flip from all this complexity to then one element, and they wonder why it's not working. So focus on one system, not one indicator. And get feedback. Someone else needs to see what you can't. Now, that isn't necessarily applicable for everybody. Is not necessarily that they can they can access that feedback. What you also need to do is create what I call a feedback loop, which I touched on earlier and I'm going to cover again in a second.
So, final action steps. I've obviously covered a lot. There's a lot of action steps I've talked about within the videos, but make sure your analysis and strategy process is repeatable and you've tested it, which means it can't be too complex, but don't fall into trap thinking, "Well, it's repeatable if I wait for the stochastics lines to cross to the upside and buy, and the stochastics lines to cross to the downside and I sell." That is too simple. So it has to be that right mix of analysis and strategy that is repeatable and measurable, and you must measure it because if you can measure it, like the traders that I work with that have data behind what they're doing. If they've got the data there, you've measured it and tested it both with historical backtesting and live results. What that's going to do is mean your confidence levels are going to be much higher because you have a sense of ownership over what you do. But also on top of that, when things go to the extremes, you can see that that's happened before, and you're not searching in your reticular activating system. You're not searching in your brain for evidence that isn't there. And that's what can often create the stress. Then here, manage risk. So you can apply safe you can apply things safely. So if you're managing risk, it allows for mistakes. It allows for draw down periods, and it means you're not going to end up losing your account. So within this, make sure you're managing risk. Again, really, what I'm doing here is repeating what I've already covered in the videos, but it's so important. And then track your trades. I don't think I can make that much clearer in everything that I've said over these last two videos. Track your trades. Track that core information. It's better you track the core information that I've talked about here in this video and do that consistently than try and overcomplicate it and then not not actually stay on top of your data. So, consistency and staying on top of your data is key. And then here, make sure consistency can be applied. So again, it's one thing having a strategy that uh is is profitable on paper, but make sure that you cons that consistency that is there on paper can actually be applied. Do you like the strategy? Is it in a condition that you like? Again, that's one of the key things that I focus on with traders is to make sure the strategy that they trade, they actually like. I don't like trading breakouts. I've been doing this for the best part of 23, 20 odd bloody years. I can't even remember how many years. Near 25. And I'm sitting there and I'm like, all this time I don't like trading breakout entries. So why would I trade that if I don't like it? Now I can go back and denote and deduce the reasons why. But I don't trade breakout entries because I don't like them. Yeah, I've got traders I work with that have been in the game six months. They love breakout entries. Well, if they like it, they can see it, and it works for them. That's often assuming the system is profitable, the best way for them to go. So part of it is making sure whatever it looks good on paper and consistently works as a strategy that you've tested, you can actually apply. And it's okay if something that works on paper doesn't work for you. The key then is to be able to deduce why and make the necessary changes. And then it says here, create a feedback loop. For some of you, that can be working with a trader. That can be working with somebody that can give you that accurate feedback. But if that's not the case, then create times in the either at the end of the day for a day trader, or the end of the week as a swing trader, either at the end of the week, at the end of the month, or end of the quarter, points where you can review your data, review your journaling, and be your own feedback loop so that you're able to start seeing where you are potentially going wrong and look for those 20% of things that are going to make 80% of the difference. Obviously, if you can get around someone with the right experience, they can speed that process up for you, but it isn't something you can't do if you're doing everything right within this within the process.
All right, good. So, that's where we are. I hope you have found that useful. As I've said, another key action step is make sure you go and watch uh the level above. This is especially important as you're at level three. Go and watch level four because level four is where the turning point occurs so that you can understand some of the things that are very specific to the people in that level. Because once you get to level four, it's the case of level four, five, and six, you are doing more right than you are doing wrong. So, you might be thinking, "What's next?" Well, feel free to follow me here for more trading insights. But if you're looking for an even more clear, specific, and proven route to your own trading success, then check out the links in the description, and they'll show you exactly how we can help.