Transcription
All right, you've made it. So, you're here as the naive newbie. Now, before we get into the detail here, I want to say one important thing. Don't see the naivity as a bad thing. You might be listening to this feeling a sense of overwhelm, uncertainty. You're not sure where to go, who to trust, what to do. But actually, that naivity can be your superpower because importantly, you're at the point where you haven't built up lots of bad habits.
Remember, I've worked with traders who are like you, have never seen a chart before, completely new, haven't got a strategy, don't know where to go, and essentially have taken them all the way up to being full-time traders. And I've worked with people who have been trying and failing for three or four years. And in a lot of those cases, those people have actually got bad habits that I've got to eradicate. So if you do things correctly from the off, not only can you progress very effectively, doesn't mean you won't have challenges along the way, but what you haven't got is a lot of bad habits. So as I said, do things right from the off and it can be a very enjoyable and a very fulfilling journey with its challenges along the way.
So let's do a little bit of a breakdown of where you are currently at. So if we look at this here, you're probably brand new to trading. You're already drowning in information. You may have been on social media. You may have heard information or recommendations from a friend. And what you're probably faced with a lot of jargon, a lot of hype as it says there. And what you'll probably notice, especially on social media, is a lot of promises, and a lot of people selling the lifestyle. So the challenge you've got, if we were to break it down into almost one sentence, is you probably don't even know where to start, who to trust, or even how to place a trade.
Well, firstly and most importantly, one of the stumbling blocks that people have early on is they think that the way they're going to learn how to trade is to how is basically how to place a trade. But the important thing for me off and if you took nothing else from this video, this would be key. That being able to place a trade is being is like being able to fill your credit card details on when you buy something online. In that scenario, once you know which order to place and how to place it, it's kind of done. What's actually more important is actually being able to pick the the the thing that you want. So if you use that analogy of buying something on say eBay, it's being able to find the thing you want and getting it for the price you want. That's the skill. It's not being able to put your credit card details in. But so many new traders stumble at that first hurdle thinking, well, I don't know how to place a trade, so I don't know what to do. And that can create a huge amount of fear. Or on top of that they think and they think wrongly that by being able to place a trade they're halfway there and actually as you see when we go through some descriptions very shortly that isn't the most important thing but I do get where you're at a lot of things are probably feeling confusing and no one's giving you straight answers a lot of things out there that are just broad ambiguous and you're thinking well how much money can I make what's a reasonable return that I can make and the trouble is is a lot of the time people will either overpromise or overhype or they won't give you a straight answer. And the reason it's difficult to give a straight answer is there are so many variables that it's dependent on.
When somebody's working with me more closely, one of the things I will do is go through a very specific set of questions to find out how much time they have available, what their trading goals are. And a lot of people in that moment don't really know. They just want to make lots of money. But invariably, there'll be a reason behind why they're doing it. It will be to, you know, build up money for their retirement. It might be a second income. It might even be the lofty heights of leaving their job, which if I've helped a lot of traders do. But whatever the goal is, you've got the goal, you've got the time available, and then you've got to build up the skill set to get there. So, it's difficult to give somebody an absolute straight answer when they say, "Well, how much money can you make?" Well, it depends whether you're day trading, it depends whether you're swing trading, and again, it depends how successful you are. It depends that particular year, that particular quarter, that particular period of time, how successful those strategies are. And that's why it's so important when you actually start doing this, any of the strategies that you choose to trade, you actually have some track record behind them.
But before we go through and I highlight specifically for you the key uh areas out of the seven areas of trading that you should be focusing on, what I want to do is just go and look at some of the definitions of that because again that's the thing that you will probably be struggling with is terminology and jargon. So let's start with analysis. So that's the first one here. So analysis is simply an understanding of price and the various mechanisms that are out there to determine price. And when I talk about the word price, I'm just simply talking about the price movement that you will see of a specific instrument. So that could be the fluctuation in the price between the euro and the US dollar. That could be the fluctuation in the price of the S&P 500. That could be the fluctuation in the price of gold. So analysis and your ability to analyze a market and analyze the price is not really just saying well what is the price? The price could be 10412. It doesn't really matter what the price is. It's your ability to understand where that price is in relation to everything else that's going on.
And then the second one is strategy. Think of strategy. A lot of traders will say strategy is their overall process. I like to use the word strategy to define the repeatable set of execution criteria. It says there repeatable execution method. So think of it like the ABCs of actually physically knowing at that point I'm going to place the trade on that particular market. So you're analyzing the market in a broad way and then as it says there using strategy to decide exactly where you're going to get in and what those what those elements are to do that. And you'll notice both of those are in green because they're the most important ones. But let's just quickly run through the others cuz I think it's important that you understand these. Risk management, that is your ability to be able to manage the level of risk on a trade. It's how much you place or risk per trade, the distance you run the trade for, where do you choose your targets, where do you choose your stops. So, it's the management of the trade. Now, that is important. And the challenge you have when you're starting out is it can feel like everything is important. And it's not that the things I'm showing you here going on from analysis and strategy are not important. They're just further down the list in terms of where you focus. So all of these, think of them having essentially an equal level of importance and they all interlink, but in terms of where you focus, you want to do it in a certain order. And that's part of the issue. One of the things that I think traders struggle with, especially newbies, and especially when you're looking at this and there's all this information, is it's not just what information to focus on, but what order to focus in that information. So what I want to be able to do especially in this video and going into next video is you have a very very clear idea of what your next steps are. So it's not that you ignore risk management, you just don't focus on it at this point. And I'll explain more about that as we go as we go through.
So let's move on to the next one which is data. So this is essentially your skill and ability and the system you have to log. It's basically logging and analyzing your trade trading performance. So all of the results of the trades you place. Now again, this is hugely important and something so many traders are missing. Not in terms of just the fact that they don't do it, but also knowing what data to collect and how to and and essentially how to analyze that data. But as you can see, this is further down the list of priorities right now.
Next one is journaling. And essentially, this is logging and analyzing your own performance, your own emotions, your own thoughts, your own reactions. and essentially being able to understand why you do what you do in what is a varying envir varying environment. So you're going to have days when the trades are going well for you. You're going to have weeks where the trades are going well for you. You're going to have months where the strategies are performing really well for you. But you're also going to have periods where the strategies are below their average performance. You're going through a losing run. You're going through a draw down period. And you've got to be able to also understand how well you perform. So, it's correlating the discipline you have with the emotions and seeing essentially what things trigger you potentially to do things you shouldn't.
And that leads on to the next one, which is mindset. Now, mindset is hugely important. Any any trader that dismisses mindset dismisses it at their own peril. But the challenge with mindset, and I've noticed this from working with thousands of traders, is that a lot of the time you can learn theoretically about mindset. And that isn't necessarily a bad thing, but right now for you, this should not be a priority. And the main reason is if you can't analyze a chart and you can't make a specific trading decision using a repeatable strategy, then there's no point having a rockolid mindset because you could have a rockolid mindset but be trading something that doesn't work. Or you could be doing things completely incorrectly. And really, you only start to see how you operate when trades are going well, when you're having a draw down period, when you're losing, when you're winning, all of the different ups and downs that you will go through. You only really know how you operate from a mindset point of view when you are actually physically trading. So my view is get everything else right because that will not only mean you've got things in the right order, but you will also then have a better understanding of how to execute properly which will actually have a positive impact on your mindset. So you can actually get ahead even though you will still have to develop your mindset once you start trading but you can actually get ahead by doing everything else right and more importantly doing everything else in order. So that's key and when it comes to support and training in terms of a definition that's just how to learn to do this properly and making sure you work with somebody that you trust and has got a track record of helping traders successfully.
So, we're going to look at analysis and strategy here because I feel it's really important that if you can understand this process from the off and very specifically how the two differentiate but also work together, it's going to put you ahead of the game. So, let's think about how markets move because this is the this is the premise in which we look at analysis. So, we're going to look at analysis first, but let's think about how markets move. So essentially markets are either moving, if we look at the overall move here, they're moving sideways or if we look at this second area here, they're moving up. But if you're looking at this in more detail, what you'll realize is there are periods even when a market overall is sideways where you're seeing price movement in an upward direction, price movement in a downward direction. So there's still upward and downward moves within that and that's important to understand. So essentially you can pick a market at any point and it's either going to be in a sideways move really moving up or down within that sideways move or clearly trending either up in this case or we could have drawn it down with up and downward moves within that as well.
So when you're analyzing a market, what you're trying to do where and this is where so many people go wrong is they'll go online and they'll see things like well use this system so you know exactly where to trade and if I analyze the market that will tell me where to trade. The difference and the difference that makes the difference is my analysis is not telling me where to trade. It's telling me essentially the map of the landscape. So what I'm looking at when I'm doing this is I'm essentially looking to see where are the borders, where are the perimeters of the map in relation to where that price has moved. So the price is the is the trajectory. The price is the um terrain for want a better word. So the price is the terrain and the movement is the trajectory. So what we're looking to do is say well where are you know where are the extremes? where the edges of the territory based on the current movement. And then if price breaks out of that, what's the trajectory that we're seeing? And that's otherwise known as momentum. And where's the next area? Where's the next perimeter? Where's the next place that price could pause or stop or at least is more likely to.
So, we're using certain tools to do this. So, we're only focusing in on three specific tools. And this is another reason where so many traders go wrong is they will be using different tools. And not only this, they'll use different tools on different days. So one day they might be using something called a fib, the next day they're using support and resistance and then they're trying to work out whether it's best that it's support and resistance or supply and demand. And they're getting confused with this. Then they overlap indicators because what they're trying to do is they're trying to use their analysis process to determine when to trade. Whereas what we're doing is saying let's use this this analysis process to determine where different types of conditions occur. So once you finish the analysis with us, what it will do is then say right here are the specific conditions or here is the specific condition that this market is in. And then you may have out of a list of 30 markets three or four that are in various different conditions. The three conditions we have are against the trend, with the trend and the other one we call it a micro condition which is called a trend line break which is an onward move after an against the trend has proved itself. Now that level of detail don't need to worry about it at the moment. What I want you to consider is this. When we are analyzing that market, what we're looking at is, we're using three tools. So we use support and resistance as the core tool. We use trend lines as the next core tool and then then the last one we use as our next core tool is momentum. So they're the three that we use so we don't over complicate it. And your goal as a trader is to get exceptionally good at applying these not just randomly but in a systematic way so you're able to measure that. And that's where the link to things like data and the the the other factors below become important. But at this stage, what you want to focus on is making sure that you use these three tools. So you can take any market and determine whether or not it's in and against the trend condition or with the trend condition or trend line break condition. And then that will then determine this area here, which is strategy. And that will determine what you then do.
So I'm going to give you an example here. So what we got going on here is we've got a sideways moving market. I'm just going to draw this slightly differently. So, we've got a sideways moving market. And what we've got is we've got the extremes, the perimeters. Up here, we've got the market in and against the trend condition. And down here, we've got the market in and against the trend condition. As we move further up, we've got an area with the trend condition. And also remember, markets don't always look exactly like this. You're going to see markets being more choppy in certain areas, especially around the midpoint of a sideways move. So, it's more likely to look something like this. But then as we go up and we come to the edge, the perimeter of the map, what we notice is price pushes higher and what we get is upward momentum. So, in this area here, because I've got nothing else in the way, I've got no other levels, no other resisting price points. I'm clear of those. Price is showing me that it wants to go higher. Not just because it's going up, but because it's got high what's called higher highs and higher lows. I've got upward momentum. I'm now in what is called a with the trend condition. So if I was analyzing this market, I don't do the analysis process and then say right now I'm going to buy this particular market and I'm going to get in and go long. What I do at this point is say I now have determined this market to be in a with the trend condition. So that will go into my with the trend list and then I will wait and this is key. This is where strategy comes in. I will wait to see if the price comes to a certain point and does a set of what we call A B C remember in the earlier video repeatable criteria. And if it does all of those, not one, not two, but all three, then I will take a trade. So rather than just analyze it and say, "Yeah, I think this market's going to go up and it's going to keep going up." and take the trade through my analysis. I do my analysis to determine the condition and then I wait and if all three elements occur at the designated point. So essentially I'm waiting for those to happen. So I'm ahead. If they all happen then I will go long because the reason I'm doing that and combining these two elements is it increases my probability. So I'm taking higher probability trades and all of this is measurable. So I can measure it and I have the confidence in what I'm doing and it makes it easier for me because then what I'm saying is I'll only trade if this hap if we're in the right place and this this and this happens. If they don't happen I don't trade. And if it does happen and I trade and the trade wins, great. If it does happen and the trade loses, which happens, I go, "Well, yeah, it was supposed to be one of my losers because I've already got the data to back up the fact that this strategy has winners and losers, but overall, it is profitable as long as I trade in the right condition and I wait for the right criteria."
So, that's essentially the key learnings that I wanted to get across to you about analysis and strategy. You use the analysis process. You only use three tools. Support, resistance, trend lines, and momentum. And the result of that analysis process, which is the same every time, is to determine one of three conditions: with the trend, against a trend, trend line break. And then when you determine if that market is in one of those three conditions, if it's chopping sideways, you just if it's if it's something like this and it's just sitting here, then that's what's known as no man's land. But if it's in one of those three with the trend, against the trend, or trend line break, then you essentially can then wait for the specific criteria. If those criteria occur, you take the trade. If they don't, you don't take the trade. So that's the key coaching and training on the key areas for you as the newbie to be focusing on. Let's go and look at a bit more detail now. Okay.
So signs that you're doing well at this particular level. So the first one here is that you are skeptical of what most of what you see online essentially. So, if in your head you're like, "Yeah, I'm pretty skeptical about what I see, a lot of the hype, everything else," that means you're in a good place. So, you're not falling into the trap of thinking that within two weeks of doing this, you're going to be making 20 grand a month or you're going to be a multi-millionaire or whatever it is that's hyped out there and you understand that even if some of the things you are seeing are true, it's probably through the trader over hyping what they're doing, overleveraging, risking too much. And there's all sorts of tricks out there. Um, I was only with one of my old trading buddies and a broker yesterday in London and we were talking about how people we've known in the industry that will publish certain results and what they'll do is they will simply take they'll say, "Oh yeah, I made this amount in this particular time." But the results aren't audited and all they've done is got two accounts and they simply trade the opposite. So they'll trade long on one market, short on the other. And at the end of the month, whichever system has worked better, the long side or the short side, whichever one's worked, they essentially take the opposite of each trade, that's the that's the result they'll claim they're getting. So, there's all sorts of things going on out there. Traders overleveraging so they can say, "Look how much money I made." And all this type of stuff. And you've just got to be really careful. Then you're ignoring the hype from things like prop firms and all these people saying, you know, come with us and you can be managing all of this money and you could be making 10 grand on your first payout. You're not paying any attention to that. You're not thinking about the money. You're focusing in on how can I learn to do this correctly? And your focus is more on a process rather than how much money you can make. And in your mind, you're treating it like a business. Now, you may be doing this alongside your job. You may be doing this alongside your current business. But the mindset you have is more of treating it like a business, not a hobby, and not something you're just going to have a dabble at. So, they're the things that I think are really important. If you're you're already in that frame of mind, then you're on the right track.
So, some of the warning signs to look out for. So, first one is consuming too much content uh with no focus. So, going out on social media and watching tons and tons and videos. Remember, it's not that the information isn't necessarily good, but you don't know if it's really viable for you, and there's no feedback loop, and there's no context. So, it's very easy to think what you're watching is hugely significant, but it's actually not necessarily the right thing to be for you to be focusing on right now. And because there's no feedback, the element of nuance can get lost because it might be that the trading approach that would work best for you is not what you're learning about there. And there's no way of getting that feedback to know. And then the next one is in line with this, but just thinking that all of your answers will be solved on YouTube. And again, it's not that there isn't good information out there, but really think about the fact that what you've got is no feedback loop and no context. As I've already self already said, next one, telling yourself that you'll figure it all out on your own. Now, trading is partly trial and error. You've got to go out and go and trade to understand more about how you think and how you operate in various different stressful situations and learning that process. But thinking you'll come up with a strategy is really going to be very hard without any experience to be able to build that analysis and strategy process that I've talked about. And then lastly, going out and trading straight away. I want to reiterate it again because it's really important. Trading straight away as an excuse that you're learning because you've got to actually actively trade to learn. Well, yes, that is part of the learning process, but you won't become good at analyzing a market because you're trading live in the market. You've got to actually follow a process first and learn that skill before you ever press the buy or sell button. So, you're not going to learn just by going out and opening a live account. That process you will learn, but learn it in the right order. Good. So, they're the things just to be wary of and a warning signs to watch out for.
A couple of keys to success here. Number one, think long term. It's very easy, especially if you've seen some of the hype out there and traders making money very quickly. And I can have a swing trade that can take me two weeks to hit target. I can have another swing trade that takes me three weeks to hit target. I can place a swing trade on the Monday and it could have hit target by Tuesday. I don't know how long it's going to take for a trade to hit target. So, even as somebody that is not in front of my screens all day and I'm taking the swing trading route, which is essentially in the middle, I'm not a day trader. I can have a trade that hit can hit target very quickly because something happens in the market and it reaches that point and price jumps up or jumps down and gets to where I want it to go. But what I don't do is suddenly start expecting that if I've made 2% in a day, I'm going to make 2% every single day. Or if I make 2% in a week, I'm going to make that every single week, week in week out. It doesn't work like that. Some weeks I might make way more, other weeks the market might be quiet. So, because I've got this fluctuation in my result, I have to think long term rather than think of it like a paycheck, going to be periods where I'm I'm like I've said, I'm quiet and there's not a great deal going on with my trades and I'm going to have other months where I'm very busy. So, although I'm looking to accumulate uh returns more quickly as a trader than an investor, I'm still going to have what I call a long-term or an investorsbased mindset. And that will put you ahead of so many people out there.
Another one, I've already said this, spend less time consuming social media trading content. Yes, there is some good stuff out there and some of it is entertaining and funny and some of it is informative, but again, is it the right content for you? And also if you can value feedback early on, that's going to make a big difference. And then lastly, just to hammer home the point again, learn analysis and strategy first before you start placing trades.
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.