Steps to Becoming a Profitable Trader

Introduction

• Presenter shares 7 rules to become a profitable trader.
• Emphasizes the importance of sticking to these rules for guaranteed profitability.
• The video provides step-by-step guidance and personal suggestions.
• Accountability is key; a secret for accountability is shared towards the end.

Rule 1: Define Your Trading Pairs

• Importance: Prevents jumping between too many trading pairs without mastering any.
• Analogy: Comparing trading pairs to people; focusing on fewer pairs allows you to "learn" them better.
• Recommendation: Maximize at two trading pairs, preferably one to learn their "personalities."
• Example: Natural Gas (NG) known for price reversals around 10:00 AM CST.

Rule 2: Set a Time Limit for Trading

• Purpose: Avoid impulsive or bored trades outside of planned hours.
• Personal Example: Trading window is from 7:00 AM to 12:30 PM.
• Benefit: Keeps trading within familiar market conditions, reducing unnecessary losses.

Rule 3: Stick to a Strategy

• Issue with New Traders: Switching strategies frequently after minor losses or seeing others' success.
• Recommendation: Max of two strategies to adapt to different market conditions.
• Strategy Adaptation: Make small tweaks rather than major changes to fit different conditions (e.g., trending vs. consolidating markets).

Rule 4: Limit the Number of Trades

• Reason: Forces selection of high-quality trades only.
• Guidelines:
  • Scalpers: Max 4 trades/day.
  • Intraday Traders: Max 2 trades/day.
  • Swing Traders: Max 3-4 trades/week.

Rule 5: Maximize Your Risk Management

• Importance: Prevents large losses that offset gains.
• Two Types of Traders:
  • Limit by dollar risk per trade.
  • Limit by contract/lot size.
• Personal Preference: Set a definitive monetary risk.

Rule 6: Establish Entry Criteria

• Prevents: Boredom and impulsive trades.
• Strategy: Have a general but simple entry requirement (e.g., bullish candlestick above VWAP).

Rule 7: Implement a Punishment System

• Purpose: Accountability for breaking the rules.
• Observation: Financial loss is often not punishment enough.
• Suggestions: Cold showers, horseradish, or other personally disliked activities.
• Community Support: Share rules and punishments with friends or trading partners for external accountability.

Conclusion

• Following these rules and maintaining accountability can lead to consistent profitability.
• Encouragement to implement and share the system for long-term success.

Additional Resources

• Video recommendation on drawing support and resistance zones for even more trading success.