Transcription
Coming up in March is going to be eight years of trading for me. And someone sent me a message the other day and asked me, you know, starting from absolute scratch, from ground zero, what I would do in the very beginning.
First of all, before we go anywhere, is totally skip forex and go straight to futures. I spent just over 3 years in the forex space before I ever even knew about futures or got into the futures market at all. And those three years were very painful. And not just because I was a new trader and didn't really know what I was doing, but because forex is not a gentleman's market. They call futures the gentleman's market. Because in Forex, nothing is centralized. Prices are determined by your broker. Spreads are insane. It's almost impossible to be an effective scalper in the forex space, and I am a scalper. It's also a very scammy industry. So, I would totally avoid forex in the beginning. I think most retail traders are going to have the best luck and the most edge trading futures versus forex. So, totally skip that. That's step number one is go straight into learning about futures and how to trade futures.
Now, when I first started trading, I really didn't want to use a demo account. I lit I used it for a very brief period of time just to get a feel for how to execute, you know, the very bare basics of trading, but I didn't want to use demo because I had nothing on the line or I wasn't feeling anything for the money that I see on the paper account. You know, I don't care if I lose 100k on a paper account 'cause it's not real. There's no emotion in that. So in the very beginning stages, I used personal capital. And not just my own capital, but my capital and my wife's capital, which is actually credit card capital, which, you know, was not a good idea here at the time. We were 70,000 in debt. Uh, we didn't earn much money at all per month back then. And long story short, I just couldn't afford to put that kind of money on the line, but I still did because I had this belief that I would be able to make it that early.
So the next thing would be not to use personal capital from the very beginning. And to be honest, apart from that quick crash course on learning how to execute, I wouldn't even use demo personally. As long as I could afford it, I could afford at least a cheap prop account at the time. I would have spent most of my time or all my time focusing on cheap prop firm accounts at first to begin with because say you have a 50k prop firm account, it's going to cost you maybe $80, right? And that $80 gets you access to $2,000 worth of potential drawdown. So, I was blowing $2,000 accounts, you know, of real money in the beginning when I could have been spending some of this $2,000 on picking up a 50k evaluation, potentially getting that funded and potentially getting a payout. Not very likely in the beginning, but you get where I'm going with this. For $2,000, I could have bought, you know, well over 20 prop firm evaluations if I was to spend the whole lot. But I lo and you know, I was losing this amount of money very quickly, like in one to two days' time, where I could have slowed that loss down while still learning something with some skin in the game by spending on a low-cost prop account. So, so that's one thing I would do is don't even think about personal capital in the beginning, just learn and potentially earn potentially with props.
Now, the other thing is, before we get into the nitty-gritty of what I would have learned, there's one book for me that was very pivotal for my trading journey. A lot of the trading books are absolute nonsense, garbage, recycled cliche stuff that you hear everywhere. A lot of the trading books are just not worth your time. Might as well read, you know, a good business book or a good fiction book. Don't waste your time with most trading books. But this book, pretend this is a book. I'm going to edit it into the camera here. This book, Day Trading for a Living by Dr. Alexander Elder. This was by far one of the most pivotal trading books I ever read. Not just for mindset, but also for inspiration and hope. Reading this book helped me to see what was possible and helped me to feel like I could achieve this dream of, you know, making a full-time income from trading. It really helped to materialize those dreams over the years. So, I would read this off the bat as a good mental starting point. And to be honest, probably one of the only trading books I'd spend time reading. Most of the other ones are junk.
Now, on to the technical stuff. Before going into any sort of strategy or anything, I would spend those beginning moments, those beginning months focusing on learning this auction market theory. It's crazy to me how many traders go into trading without understanding why the market moves, what moves the market. And of course, not based on conspiracy theories and all that. You know what I mean? Conspiracy theories, candlesticks, chart shapes, all this stuff that you as a beginner are told. You see on social media, you know, this is why the market does this. This candle here, you know, all these things which actually don't make any sense and are totally not true. Beginners never put in the time to understand why the market's moving, what's moving the market, and the psychology of an auction, which is part of what causes the market to move up and down. Auction market theory, and actually I'll add in order flow into that as well. Understanding order flow, and these two together will give you the good base, knowledge, foundation. You don't have to be an order flow trader, but you do have to understand auction market theory and understanding order flow alongside that will help you to know why the market's moving. It blows my mind how many traders want to be full-time traders and make this dream a reality but don't want to put in any time to learn what's actually happening behind the candlesticks and why the market moves. So that's hugely important. Wish I would have understood this sooner. Incorporating this into my trading gives you a lot of edge alone. Just understanding this is a huge edge. So spend time on that if you haven't already.
Now, if we're talking trading strategy, you guys know me, I am the volume profile guy, right? But I wish I had learned that a lot sooner. I had some success with ICT in the past. I had some success even before that just trading RSI and Bollinger bands. A lot of things can work, but it works a lot better when what you're trading is based on facts, based on real transactions, based on real data, and is something that real professionals around the world use to help make trading decisions. You know, your professionals are not look not looking at candlestick gaps and they're not looking at RSIs and whatnot. These things are amateur. One of the key professional tools used by both professional traders and successful retail traders is the volume profile. So, I would spend so much more time in the beginning only focusing on this. I would put everything else aside. Of course, I'm biased, but I'm biased for a reason because this truly is the thing that made the biggest difference in my trading was learning and understanding volume profile and using that in my trading. Of course, my whole strategy is just volume profile. I only trade based on volume profile. But even if you still can't let go of anything, you know, ICT, whatever it is you do choose to trade, just add volume profile to it. Learn how volume profile works, it's a complimentary tool as well. You add it alongside your current strategy. It's going to really help you with market context, making more accurate trades, and avoiding bad trades. So, I would be spending so much more time on this than anything else and build my foundation using only volume profile.
So, that's your strategy, right? That's strategy, market understanding, and a good starting point. From this point, once I've got all that down, if I'm starting from absolute zero and I've got, you know, not much capital, still working 9 to 5, whatever it is, I would then put all my time and all my effort and all my capital, not all my capital, but what I can afford to put into 50k props, 50k props only. When I was first started, I same thing. I'd see the big accounts, you know, the 200k accounts, your 150k accounts. I think, you know, that's what I want. I want max allocation, biggest account size. Uh, I wouldn't waste time with the small accounts in the beginning. But these small accounts, and I'll show you something here. Number one, so number one, your 50k account right off the bat is very cost-effective. You can pick one up for about 80 bucks, $80 to $100, let's say, for a 50k prop firm evaluation. Now, a 50k account, you have $2,000 worth of drawdown. That's your true account size. And your profit target is $3,000. So your max drawdown to profit ratio, you have to make 150% of your max drawdown in order to pass and get funded. If you compare this to your bigger account size, let's say 150k prop firm account, your max drawdown is 4500. Your profit target is 9,000. So you have to make 200% of your max drawdown or your true account size in order to pass. So off the bat, especially for beginners, that's a lot more difficult. Making an extra 50% on your total capital is a lot harder than a 50k account. Now, it's not impossible, of course. And yes, there are benefits to having a bigger account, but you also have to think, 150k prop firm account in the beginning is going to cost you maybe $1500 to $200. And that's going to add up really quick in the beginning when you are blowing a lot more accounts. You know, you're not quite experienced enough yet to deal with that extra account gain required and then maintain that account once you've passed through to getting your payout because you also have to think you also have to make that same 200% again in order to even qualify for a payout with 150k. So, with a 50k account, that ratio is smaller, 150% of max drawdown, meaning you can pass quicker and you can also get to payout quicker. And think you've spent $80 to $100 to get this account when you get your first payout. Even if you just get a $500 payout, you've four to 5xed your money, your investment, just with a simple $500 payout. So, that speed to payout and that ease of passing and the low cost are very important, hugely important as a beginner. And I've also shown on video as well. I have a video on my channel which if you haven't seen yet, go back and watch about what's possible with a single 50k account. This is no copy trading, just one 50k account on its own trading for one month, what's possible within those limitations. You can do a lot with a 50k account.
So the reason I say that I would focus more on those in the beginning is because you're limiting your downside. There are very cheap cost-effective accounts and number two, you can make a payout that's worthwhile. You know, you're probably earning, if you're anything like me, at the time when I first got into trading, I was earning about 50k a year from my office job. You know, about $3,200 per month after tax, whatever it was. So, you know, making three grand in a month from a 50k account is really not that hard. I mean, your profit target alone to pass the eval is three grand. So, not that it's easy, but it's also not hard. So, I would really be focusing on those in the beginning more than trying to focus on the big account sizes and going for those big accounts. Just really master the 50k account. You can do so much with a 50k account. I've got a video coming on this next week, but I truly believe if you really focus on mastering those 50k accounts, that's all you need to either match your full-time income, make a full-time income, or more.
No, it's not going to be easy. Of course, it's not going to be easy. Nothing good is easy. You know, being able to make money from thin air in a couple hours a day with no boss and no co-workers is not supposed to be easy, right? That's a privilege, something you earn. It's very hard to do. But the point is, you don't need the big account sizes to do it, right? If I could go back, that's where I'd start. And that's all I'd focus on. Focus on that. The psychology, the emotional management, all this stuff, the discretion, that stuff can't be taught, but it's only earned with screen time. So, from that point forward, I'll just be putting in as much hours as I can, you know, at least 2 hours per day on the charts, actively trading, and building my discretion, building my personal edge using what I just outlined in this video, and really going for it on those 50K accounts. And if volume profile is something that interests you, I've got a really good course on volume profile. I'll link it in the description and in the comments below. Check out the testimonials. Over a thousand people have taken the course and have found really good value in it. So see what they have to say. It's one of the most practical courses on volume profile you can find online. Or you can go through my channel and look through my volume profile playlist as well.