If you stay, I'll show everything you need for free. Leave, and you'll waste your time and money on YouTubers who sell courses because they can't make money from trading. This video is timestamped for every section, with further resources down below in the pinned comment.
Seeing this when I was a beginner would have saved me a tremendous amount of money and time. How to learn trading. We are all used to learning things by reading, studying, watching videos, and then trying to memorize that information.
That's called explicit learning. where we are actively trying to learn and memorize information. Now what about learning to ride a bike, to play an instrument, swing a golf club, or become high ranked in a video game?
Sure, there's a little bit of intentional memorization going on, but developing those skills almost entirely stems from implicit learning, and the only way to develop that is through experience, repetition, and time. Becoming a successful trader is almost entirely dependent on this as well. The importance of this topic will become clearer as we continue, but just know that the key to getting better at trading is by trading. not by watching hours of YouTube videos or through buying 300 books.
The two ways to trade. There are two categories of traders, systematic slash system-based and discretionary. I will go over the differences, tell you what I do, and you can choose how you want to proceed. Systematic traders create rules and only take a trade when the market movement, also referred to as price action or just price, has met a set of criteria. An example of this could be price being under the 10 period moving average, which is an indicator, The market is down over 1% since market opened, a descending triangle has formed, and maybe the coffee was really good this morning.
Almost everyone starts their trading journey by doing this approach, because we all try to find the holy grail of various combinations that create consistent profitability. Creating a truly automatic trading system is incredibly difficult. Of course it's appealing to think that we can stumble upon various combinations of things that make us a ton of money. But you have to remember that price action is the result of thousands of different participants with varying degrees of influence, and we never know why price moved the way it did unless you have access to the traders who traded with enough size to actually affect the market.
More on that later, so try not to get overwhelmed by that run-on sentence. Remember that I intend on covering everything, and the order of the different topics is intentional. So, the second way to trade is discretionary.
These traders are following rules in regards to risk management. but the trades they take vary from moment to moment. They are not waiting for the market to meet certain criteria based on a bunch of rules. They make trades based on a feeling, aka intuition, and that is only developed through implicit learning. It cannot be taught.
It takes a lot of experience to become a discretionary trader, and it takes a tremendous amount of discipline to do well, because you are relying entirely on yourself. Let's discuss the secret third way to trade, which encompasses a large percentage of all traders, and is most likely where you'll end up gravitating towards. This would be the combination of a systematic and discretionary approach, sort of getting the best of both worlds. This means some traders are incorporating various information into their trading, like maybe supply and demand, support and resistance, order flow, market profile, or something else. And they're waiting for something to happen to some degree, and then they're taking a trade based on what seems like the best decision in that specific moment.
Think of it as waiting for criteria to be hit, and then deciding whether or not to act on that. On top of that, They're also deciding on a per trade basis where they want their profit target and stop loss to be, which I will give you a complete guide on later on in the video. For now, I just want you to understand the different ways that you can approach learning. This is just an intro, and more information about these two approaches will become clear as we discuss everything else.
I will give my personal recommendations and show you what I personally do later. Indicators and Technical Analysis, which we will be getting into a lot. These are the most misunderstood concepts in trading. and people will waste their time for months or years until they find out what I'm about to tell you. YouTubers make videos over and over about using these as trading strategies because it takes extremely little effort from them due to thousands of days worth of charts to selectively choose, and beginners watch them over and over because they trust that the YouTubers are actually there to help them instead of to make money off them.
I will get into that later. Indicators take information from the market in order to create some type of visual. Something like a moving average will smooth out price action by averaging the recent candles, lessening the impact of quick moves up or down.
Now, there's a reason that a lot of more advanced traders have zero indicators on their screen, but they can be very useful in helping you learn price action as long as you understand that they aren't magical tools that work by themselves. I'm now going to say one of the most important things you can hear, and this will save you a lot of money and hours of wasted time. No matter what you add to the screen, no matter how many lines you put on it, you can still see the difference.
connecting price points, no matter what time frame you use, what color the candles are, which indicators you use, what time you trade, whether you are creating an algorithm or are a discretionary trader, we are all just learning how the market moves. aka price action. The market is there and it's going to do its thing no matter what you do. And the lines you put on the chart do nothing except structure price action in a way that makes sense to you.
Maybe you like to watch price action in terms of how it interacts with the moving average. Maybe you like to plot support and resistance, ascending and descending triangles, or something else. That is a great way to add perspective to what you're learning.
Just don't fool yourself into thinking that the line you just drew can predict the motives of thousands of different market participants all with varying degrees of influence over the market. Instead, use these tools as a way to assist you with what everyone is doing, which is learning price action. It is there regardless of what you do, so you can choose to use 100 indicators or 0. Do whatever you want to do, but now you understand the limitations that many people never realize as they get caught in a loop of searching for the holy grail. There is no indicator that works as a profitable trading strategy by itself. Something that's overbought can continue to go up.
Something that's oversold can continue to go down. These are terms associated with the RSI indicator. Sometimes price will go back and forth.
Sometimes it will go almost straight up or down. Once you understand how chaotic price action is, the limitations of indicators will become clear. But again, if you want to use a couple while understanding their limitations, then go for it. Additionally, volume is not necessary to use. but you can put it on your charts if you want to.
Some people use it, some people don't. Whether you want to incorporate it into your trading strategy is completely up to you. Personally, I don't use it because it has no effect on whether I take a trade or not. This is a good time to mention that you're constantly going to hear traders say things about how you're supposed to trade.
You just need to remember that almost all of the technical trading advice you're going to hear from YouTube, Reddit, Twitter, and Discord is from traders who aren't profitable. So remember to be skeptical of everything. and don't automatically believe what someone says just because they use big words or have a large social media presence. Finding an edge in trading. This is what we're all trying to achieve.
An edge is just what we refer to as something that allows you to make more money than you lose, or at least the ability to. In something random, you would expect to come out break even. An edge makes you come out on top.
Regardless of how you end up trading, you will be able to take away some valuable tools from this section as you begin your journey. As a beginner, you will be learning about yourself and what kind of trader you want to be. Do you want to hold trades for many hours and go for big moves, or do you want to be like me, who sometimes takes 10 minutes-takes 10 trades in 5 minutes on a 20 second chart and is done for the day? Regardless of that though, there are questions you can only answer through your own experimentation.
You pair this with journaling to keep track of your progress, trades, and all that good stuff. I can't just say some random thing or give you a few instructions that will make you profitable if you follow them. No one can. But, I found my own edge in just a couple of months, and I'll tell you exactly what I did to accomplish this as well as how I structured my learning. I did not discover some magical combination of random things.
I discovered a way of thinking about price action. How I found an edge faster than almost everyone else. This is how I did it, and you're welcome to copy it or to do your own thing and completely disregard me.
In the first couple of weeks of starting, I monitored my thoughts and emotions to find commonalities in the thought patterns that led to good or bad trades. Obviously, trading is not that simple, and that alone is not enough. But, it accomplished two extremely important goals.
First, it was a good way to add structure to learning how the market moves. Secondly, it very quickly helped me eliminate all of the stupid and irrational beliefs of thinking I could find some sequence or candle pattern that was consistent enough to make me profitable. You will think this way as a beginner too, and eventually your pattern seeking brain will stop going, holy crap, when peepee goes poo-poo, the dee-dee goes doo-doo, yeah!
I made checklists that I would look at before, during, and after a trade. It changed based on the problems I was experiencing and what I needed to keep in mind. If I found something that kept resulting in bad trades, then I would try to eliminate it by creating a reminder. For me, my notes were reflections about trying to solve what went wrong and what went right. Then, after trading was done and my mind was clear, I would scan through all of my notes to find anything interesting.
Sometimes I would read stuff that would give me ideas to try out the next day. And sometimes I would find a problem linking a bunch of bad trades. From there, I would update the notes I looked at before, during, and after the trade to address whatever the current problem was.
My trades were not about going holy crap when the candle looks like that, then this happens next. My notes were about introspection, market movements, aka price action behavior, volatility, which I'll explain later, other measurable factors, like the time of day and number of trades I took, and the ways that all of these things interacted with each other in relation to whether my trades were good or bad. Not a single note was about trying to identify setups or patterns to create a system. I know that might sound counterintuitive, but I never planned on my learning being about trying to identify a unique pattern that would give me an edge. In fact, anytime I identified an indicator thought, which is what I called thoughts that were thinking, when blank happens, do blank, I would identify those thoughts as irrational and dismiss them.
Why? Because the market isn't that simple. My goal in learning was not to trade like an indicator, since indicators have no inherent value by themselves. My goal was to become something that a computer couldn't be better at.
Of course, this was my approach to becoming a discretionary trader, not a systematic one, and this worked for me. There are still many tools in there for systematic traders to utilize though. Okay, futures are the best to trade and it's not even close.
Please just bear with me for a sec, because I remember when I was a beginner too. There are so many options on what to trade, and I'll tell you why I and so many others trade futures. High liquidity, small spreads, flexible hours, incredible trading platforms and software, the contracts are very simple to understand, and commissions are low. And if you're like, what the heck are futures?
Just hold on for a sec. These are much better to trade than options. 60% of profits on futures are taxed at the long-term capital gains rate, which saves a ton of money.
Additionally, there is no PDT rule in futures, which is the rule that you have to have over $25,000 to day trade stocks and options on a margin account. That rule can be bypassed by switching to a cash account, but that limits your transactions to only using settled cash. Even if there was no PDT rule, they're still much better. They trade almost 24 hours a day, 6 days a week.
There are several markets to choose from, anything from soybeans to cows to the S&P 500, but personally I only trade the NASDAQ, because it moves like it's on crack, which is similar to how my brain operates. Remember that no matter what you choose to trade, all of us are learning price action slash the way the market moves, which is the result of a ton of participants all with varying reasons for trading. So, if we're all just learning price action regardless of what we trade, why not do that with the one that's easiest to understand, has the most benefits, and has the best trading platforms?
For the most part, Just don't trade options crypto or stocks. Options can be great for passive investment strategies, but their spreads are typically really bad for active trading, which I will explain later. Some people will say things like, I don't trade futures because I don't want to pay $3 per trade in commissions, but they're typically losing more than that to the spread on every options trade. I didn't even know about futures when I first started, and that was partly because of how hard options are pushed on YouTube and from advertising. Start with futures for simplicity, and maybe consider exploring options down the road.
Avoid crypto and stocks, but forex is a great choice too. This is about trading currency pairs. A currency has value relative to other currencies, and this value constantly changes, which is what you're trading.
Ever heard an old person be like, the dollar is weakening because the liberals let the Chinese take over. The liberals let the Chinese... And then you're like, yeah, okay, watch out for that step. Don't want you to break your other hip.
Yeah, even if stocks, options, and crypto didn't have these bad limitations, I would still trade futures solely for the reason of the superior platforms, and this will become very clear in a couple minutes. Do not start with real money. Please.
People start their trading careers with their real money, including me, which is basically the same as jumping out of a plane by yourself with a parachute having no idea how to use it, hoping to figure it out as you go and assuming nothing bad will happen. You know what happens? That's right.
The parachute guy. bounces off the ground like a pogo stick, and the aspiring trader has their hopes and dreams die as they say goodbye to a large amount of money. So let's be clear, trading with real money without an edge, which remembers what we call a system or an approach that gives you the ability to make more money than what you lose, is gambling. When you don't know what you're doing, you're just guessing, hoping that it works, and trying to extract lessons from the experience.
That's fantastic, because how else would you learn? But you don't need to throw away your money to do these first stages of learning. This is why you start on a simulation slash paper account, which lets you trade the market just like a real account, except the money's fake.
Making money on a sim account doesn't necessarily mean you can make money on a real account. But, if you can't consistently make money on a sim account, why on earth would you start performing better with real money, real emotions, and real consequences? Which broker to choose and actually getting started with trading?
So, we're going to proceed with futures for the reasons discussed earlier. Please do not go with options solely for the reason that it's what you've seen other people do on YouTube. And, if you are going to trade stocks or options only because you can find brokers that offer zero commissions on trades, that reasoning is extremely flawed. Even without me telling you that 60% of your profits are taxed at the long-term capital gains rate on futures, which would make up for commissions and more, you shouldn't be basing a decision that impactful based on little expenses like commissions. Plus, you'd be losing that and more to the typically bad spread on entries and exits.
Anyways, back to where to go to start. Let's go with a free option, which is practically just as good as NinjaTrader, which is what I use. And, if you're still serious about trading in a couple months, you can consider the lifetime license or monthly leasing NinjaTrader then. I personally own the lifetime license, which costs $1,100.
When slash if the time comes, I have a quick guide down below on how to set everything up with the platform as well as why I think it's worth the cost. So let's go with Tradevate for now, which is the best option for new futures traders. It's completely free, it's a fantastic platform, and you can do as much sim trading as you want before using real money.
Here's a fun fact, NinjaTrader recently bought them for $200 million. The free trial lasts two weeks right now, and after the trial it's only $4 a month for market data to trade the most popular futures contracts, so that's the extent of what you have to pay for. Go to their website down below, follow the instructions to get your account set up, and then you can use a tutorial on YouTube to become more familiar with the platform.
Trading directly on the chart, like you see in this picture but we'll get more into later, is the best for learning because this helps you visualize the exact levels where you plan on taking profit or taking a loss. You should never enter a trade without these two things in mind. but we're going to get into that more later. For now, we've just covered how to structure your learning, how learning trading actually works, what to trade, and how to get started. If you would like to learn more about how futures operate and more, I made a guide on them that would have made things much easier for me when I first got started.
It's down below, with everything else that I ever mentioned on here, ever. Let's continue. You're doing great.
Maybe. Maybe not. I don't know.
Journaling is incredibly important. Because not journaling implies you think every time you realize something that it'll all of a sudden just instantly be stored in your long-term memory and that it can be recalled at the snap of your fingers. Think about that.
You know that's not how the brain do. Trading is hard. And, when you're first starting, you're going to start realizing new things constantly.
Write them down. You'll make dumb mistakes, you'll make great decisions, and you'll do all kinds of stuff that you should be recording in some way. Then later, you can view your notes and restructure them to extract some lessons that are meaningful to you that will make you better.
Journaling and lots of deep thinking about my approach is the entire reason why I found an edge to trading so quickly. For me, that was as simple as having a Google Doc of bullet points of dates and then putting my daily reflections underneath them. Sometimes it would just be random thoughts or realizations.
pictures of the trades I took, or of the price action from that day, or something else. I would leave the first couple of pages for more important ideas and concepts I was working on during the trading sessions. By doing this, you will be able to identify and fix common mistakes, create rules to make you trade better, and much more. Remember that you're learning a brand new skill, except this time there's no teacher to fail you if you don't put in any work. Nobody's going to hold your hand, make sure you're okay, or give you your money back if you lose it.
Never trade without a stop loss. Beginners ignore this and it's why they end up blowing up their accounts, just like I did when I first began. You should never enter a trade without an exact spot in mind where you will close the trade for loss.
And, since you should be signing up with Trade of 8, you will learn how to attach a bracket to your order and this will put a stop loss and take profit level on the chart that will automatically close the position for a win or a loss depending on what happens. When you don't use a stop loss, you are telling yourself that there's no way you could be wrong or you're at the very least implying that you're willing to risk your entire account. Losses are part of every trading system, and learning to deal with them and accept them is part of the separator between those who fail and those who succeed long term. Anyone who says that having a mental stop loss is better than just having an order that automatically closes the position if hit is, something that rhymes with ffdupid.
There's no secret organization or algorithm waiting for you to put your stop loss somewhere so it can make you lose every time. Some people will blame anything and everything imaginable before ever admitting that their inability to trade is the result of their own incompetence. Those types of people would have clif-huh?
clicked off in the first couple minutes anyways, so I guess I'm just yelling at a wall, which I do a lot. So where should you actually put the stop loss? Where does the stop loss go? Your stop loss should always go where your idea about what was going to happen becomes invalidated. At the same time, it needs to go where you think price will continue heading that direction if it hits that point.
and you also have to consider how much money you're willing to lose. However, you NEVER base the stop loss solely on the amount of money that you're willing to lose. That teaches you nothing about price action, it just teaches you how big of a loss you can handle, which is stupid.
You put it in the spot where your idea becomes invalidated and where you think price will continue that way if hit, which focuses the learning on the exact way that price moves. If you aren't understanding the part about where price will continue, this is because you want to know how close you can put your stop loss to the entry without it ruining the edge. If your idea always gets invalidated about $10-$15 worth of movement away from the entry, then you are wasting money for no reason by putting the stop loss $30 worth of movement away from the entry. Make sense?
Essentially, how can you achieve the goal of setting your stop loss while losing the least amount of money possible? We'll be going more into risk-reward ratios and the relationship between how much money you lose or make on each trade later. Just remember to always use a stop loss, and to use it in a smart way that puts the focus on learning price action. Alright, we're gonna cover a lot here.
This is literally the last trade I did at the time of me writing this. It happened to work, and I'll use this to explain some important concepts. First of all, this is NinjaTrader, and I'm trading the Nasdaq futures.
The Nasdaq is the top 100 tech companies, or something. I don't know. Doesn't matter.
Don't care. See the numbers on the right side? Futures move in points, rather than dollar amounts like stocks do. Ever heard someone on the news being like, The Dow fell 30 points last night after a picture of Mark Zuckerberg wearing way too much sunscreen circulated the internet and various chat forums.
Yeah, that's because futures. Although I have no idea what the Dow is and I refuse to find out. Anyone who tells me what it is in the comments will be banned and reported to the FBI.
So that entry is at 12,166.75. And I'll just say the last couple of numbers from this point on for obvious reasons. Reasons. Also, there are four ticks in one point. and a tick is the smallest interval that futures move in.
That's why you'll see.25,.5, and.75 at the end of all these numbers. Now, you can see a 4 in the box attached to the entry, which means the trade was 4 points in profit during the screenshot. During the second screenshot, it was 8.75 points in profit. You can trade Nasdaq futures on slash NQ or slash MNQ, which is just their little symbol you put into your trading software to get them to come up. They move exactly the same.
They're both the Nasdaq. but MNQ is 1 tenth of the size, so it's great for learning. One point on NQ is $20, and one point on MNQ is $2. This trade worked and got closed out at my take profit that I moved to 78.75.
Since I entered at 66.75, that means I made 12 points on this trade. That means a gain of $240 on NQ, or $24 on MNQ. I just told you a lot of information there, but it's very simple if you take it one step at a time.
I don't expect you to just instantly know everything that we've covered. Also, did you notice how I moved my stop loss? The reason I took this trade was because I was betting on price going up through the highest previous price, which would be the top of the first red candle you see on the left side. I put a red line just above it. When price turns around like that, we call those pivots, which makes sense, because piv-pivot.
When I entered, I figured that if price came down to where I put my stop loss, then it would keep falling. So, putting my stop loss there limits the risk on the trade to losing 4 points. After it popped up, I then moved the stop loss further up because I figured if it didn't push up through the pivot in that moment, then it was going to fall, and fall hard.
So, I moved the stop loss in the second pick to the new invalidation spot. I showed this to you to demonstrate how stop losses are incredible tools, how you use them in conjunction with your belief about what will happen next, and how what will happen next is constantly changing. Now listen good, and listen close. I never, ever, ever move my stop loss further away to increase the loss. I only ever move it closer.
I did not move the stop loss in the second picture in order to lock in profit if it came back. I moved it because I thought that price would fall down a lot if it couldn't break through the recent high in that very moment. You will understand that very quickly as you gain experience with the chart trading on Trade of Eight or Ninja Trader.
Trade of Eight for now. I'm just implanting Ninja Trader in your mind, subtly using. Psychic powers. Prop firms!
The link to the video on this will be down below, which I specifically made for this guide. But hold on, I'll give you the summarized version and what you need to know. First of all, remember that trading your or someone else's money without first developing an edge is just guessing slash gambling. You should only ever consider using a prop firm once you have an edge, otherwise you'll just be wasting money. These online firms allow you to trade with their money, and in return they take a small percentage of the profits.
First, you must pass one or sometimes two evaluation challenges on one of their accounts, hitting a profit target before hitting a specified max loss. They use many rules to make it difficult, or at least to make it so you can't just get lucky, but this is still a good option down the road. I only support Trade Day for reasons you can read about in the description, but watch the full video on prop firms on my channel in the future when you're actually ready to use one. I just wanted you to know that this is an option, but also that it's stupid to pay for these challenges before you're actually good at trading.
They can be very helpful for removing the pressure of trading your own money, and you'll know when the time is right. Alright, this one's pretty massive. Beginners fall into the trap of watching indicator and trading guide videos over and over, hoping that they'll hear something that will make them great at trading.
I did this too for a while. The traders who make it are the ones who eventually realize that these videos do not help. Just like a person who's never played the piano can't play Moonlight Sonata after watching a 10 minute tutorial on it.
Remember that unless you have created an algorithm, being good at trading is almost entirely based on our brain's implicit memory. The only way to build this memory slash intuition is through experience, repetition, and time. There is no shortcut to profitability. And clicking on videos about how the shape of a candle is somehow indicative of what will happen next is not the way to achieve that.
That also happens to be the most infuriatingly stupid concept in all of trading, but I will remain calm and carry on with this section. Some people defend these YouTubers based on their information being free, which is a 14 IQ defense. That's pushing it. Because how else would you market the services and products you sell? Plus you'll be shocked when I show you how much money my videos make in a sec.
I choose to make videos on concepts I think will help people, rather than the concepts that I know beginners would click on. Why beginners, you might say? Because you are the biggest audience.
the easiest to target, and the most likely to spend money on courses or some other services. These channels act like they can give you all the answers, which comes in the form of buying a course or something else. I'm not kidding when I say you cannot find a big trading channel that doesn't sell a course, trade alert system, private discord server, book, or some other product or service. Someday, when I myself am consistently profitable and claim to be good at trading, I will have my broker statements audited by a third party service for everyone to see as proof. Then, I will be making a big video challenging the big channels into having their broker statements audited as well.
I know they will say no, and they will list an abundance of reasons as to why that is, but anyone who hasn't been sucked into their vortex of deception will know that it's probably because they aren't even good at trading, and that they only make YouTube videos for the ad revenue and to convert viewers into buying their courses and other services. I want you to think about the most popular videos about trading. Now, remember that beginners are the biggest audience, and that 98% or so of traders fail.
Think about that. Hopefully you just thought to yourself, oh, if I want to actually succeed at this, maybe I should steer away from the exact same videos that all of those who failed before me watched and believed. If you learned that lesson from me now, you're already way better off than even intermediate traders.
And if you're still watching, you have already begun separating yourself from the majority. Those who weren't willing to actually put in any work already clicked off. And I'll actually tell you down below in the pinned comment what percent of people are still watching at this point. It will be shockingly and sadly low.
Keep going and have reasonable expectations. You're doing great. Anyways, I'm not going to name channels for this part, but a lot of the live trading that happens on YouTube has a huge history of deception. Many have been caught on sim accounts while pretending to be trading real money, and many are trading evaluation accounts sponsored by prop firms, getting direct payments for advertising, and making a ton of money on referrals. Just keep that in mind, that even live videos can be faked in some ways.
Also keep in mind that popularity doesn't mean intelligence. honesty, helpfulness, or anything beyond the fact that they possess some characteristic that attracts people. Some popular people are great, but know that popularity alone is not a logical reason to believe, trust, or worship anyone.
Question everything, because the trading community is full of fraud, charlatans, and false promises. I picked the trading channel to show you an example of what targeting beginners for that sweet ad revenue looks like. This guy even says he's looking for traders who are tired of gurus and are ready to go pro while selling. three different courses. You are the guru, what?
You can't make this stuff up. Oh yeah, and that video right there has made over $200,000. The video of me calculating all of the numbers and showing you my own stats is down below, if you're interested after. Alright, the technical stuff, sort of. Price, which is represented by candles here, only goes up when there are more buyers, and it only goes down when there are more sellers.
If both sides were even, price would never move regardless of how many participants there were. If there's one buy order and one sell order, that's a match. If there's a million and a million, it's still a match.
Imbalances make things go up or down. This is a 1 minute chart that I selected for this video, even though I actually trade on 20 second charts. Anyone who says that there is a superior timeframe for trading has the brain capacity of a used walnut or is new and just doesn't know enough stuff yet. Find something that you like and then stick with it, which is more important than cycling through a million different timeframes and chart types hoping that it will somehow reveal a secret pattern.
So, each candle represents one minute of movement. If it's a green candle, price opened at the bottom where the green starts, and the top of the green part is where price was when the minute ended. Oh, by the way, the wick is just the little black line at the top and bottom, with no green on it. Thinking of it as the open and close is helpful.
The wicks show where it traveled at some point during that minute. Now, I'm going to switch the screen to this exact same date, but on 20 second candles to illustrate a point. Bang.
Notice how it didn't really change. except each candle got replaced by three 20 second candles. You now see more information, but sort of the same information, just more of it, you know?
The only thing that changes when you change candle timeframes is the amount of information you see, which is really important for you to understand, because that shows you just how stupid this weird thing in the trading community about which timeframe is best. I don't even remember how that sentence started, so we're just gonna keep going. You can see more of what happened by going lower, or you can filter out the action by going higher.
Just like there's no holy grail of trading system, indicators or anything else, there is no superior time frame chart setting candle color, candle types, or anything else. There is only what you like, and then stick with that, or maybe consider using a couple of different charts, which many people do. Remember that above everything, the way to get better at trading is by trading.
I happen to like my down candles being peach or salmon or whatever color that is, because red makes my brain go, eh, didn't make me better at trading, but my eyes like it. There are several different ways to enter and close a trade. Personally, I use market orders every time I enter because my trading is fast paced. These get me in at the best available price, which will be somewhere between the bid and ask.
I'll explain that in a sec. The other most popular order type is a limit order, which means you get filled at that price or better. Sounds great, but it has its pros and cons, the biggest con meaning that price can go on without you ever getting filled. Each order type is good or bad depending on the situation, and this will become obvious as you progress as a trader, and find what works best for you.
for the specific way that you approach trading. In that picture on the right, I drag the green line to the price level where I will take profits, and I drag the red line to where I will close the trade for a loss. This is where orders get really cool, because I enter with a market order, and at the exact same time that this is submitted, the take profit and stop loss order are submitted too. From there, you can drag them to different spots on the chart.
This is called an OCO order, meaning one cancels the other. It just means that the stop loss order gets cancelled if the take profit gets hit, and vice versa. Why? because in this trade where I shorted, aka sold, aka I'll make money if the Nasdaq goes down, aka my position is minus one contract, my take profit level is actually a buy limit order that will buy a contract to close the position because I'll go from minus one contracts to zero contracts, and my stop loss is actually a buy stop market order that will buy my position back for a loss.
If they didn't cancel each other, you would end up having those orders buy or sell and put you into a position you never meant to be in. So, OCO orders are a great tool, and if you're using a platform that is trading directly on the chart as seen here, it lets you visualize your stop-loss and take profit levels the best way. Keep in mind that there are very few brokers and trading platforms that let you do this, directly on the chart. Being able to trade like that was one of the reasons that I left options for futures. Also, if the whole selling and buying thing confused you and you're lost, don't worry about it.
It sounds more complicated than it is. When you want something to go up, you buy. and then you sell when it's higher priced to profit on the difference. When you want something to go down, you just hit sell instead of buy, and when it goes down and you buy the position back, you make the difference. Same process, except you go from positive to even, or you go from negative to even to close a position.
All you need to know is the impact of this information, not necessarily the information itself. Market makers are people, but mostly just computers now, that bring buyers and sellers together, and they take a small cut of every transaction. All you need to know is that you're going to lose a bit of money to the spread when you trade, because the spread is what the market makers get for compensation of their services.
If we didn't have them, stuff wouldn't work as well as it does, and that's all that matters. Now look at the screenshots there. I opened NinjaTrader, and these were the first two screenshots I took of the bid-ask spread on the Nasdaq at about 3.30, so 30 minutes before the close of regular trading hours.
The numbers on the right are how many contracts are on the ask and bid at the associated levels during the screenshot. Maybe. I think.
That's not important. The first screenshot has a spread, aka the difference between the bid and ask, of.25, which you should recall is the smallest interval of movement on futures, aka one tick. So, selling one contract at that very moment would get you filled at the bid of 28.25.
Remember that you always lose to the spread, so market orders have you buy expensive and sell cheap. Sometimes, what I'm saying might not always happen, and that's because the market is moving faster than what we really see. There will always be a bit of variance. Maybe you'd get filled slightly better, or slightly worse. In the second screenshot, whoa, the bid ask spread is now two ticks at.5, or half a point.
You might get filled at 29 even there, which is the price level between the bid ask. You should now know what you really need to know without overcomplicating this. So, great job, and let's move on.
Risk-reward ratios. Okay, this is really important, but it's more important that you understand what I'm about to say in relation to its importance. You get that?
Me neither. First, you are new to this, so you don't have an edge yet, which remembers the thing that makes trading non-random. A coin flip has a 50% chance of heads or tails, because the two outcomes are equally likely. If you make the stop loss equally as likely to be hit as the take profit, then over a large series of trades without your human-ness to influence anything, you'll come out a round break even, meaning losing about the same amount as you made.
To make a trade 50% likely to win or lose in the absence of a profitable trading strategy, you'll have to be very careful. That would mean risking 5 points for 5 points, 2 points for 2 points, or for stocks, $5 for $5, $2 for $2. Dude, dude, dude, dude.
You get the point. Both sides are the same. The risk, aka the stop loss, has to equal the reward, aka the take profit. This is where we introduce the risk-reward chart. What if instead of risking 3 points for 3 points, which is a 1 to 1 risk-reward ratio, you risked 3 for 9?
Ooh, fancy. Well, Risking 3 for 9 is a 1 to 3 risk reward ratio because math, so that would mean that if you won only 25% of the trades you took, you would be breakeven. Yes, doesn't it sound amazing to be wrong over 70% of the time and still be making money? But, of course, remember that trading without an edge is random. So, without your human-ness to influence anything, a 1 to 3 risk-reward ratio would just make you wrong on around 75% of the trades and correct on around 25%, ultimately giving you the exact same return as when we started with a 1 to 1 ratio.
Aw man, that's no fun. The math just balances out to the same result. When you don't have an edge and are therefore trading randomly at best, or somehow even worse than what a random algorithm could do, which is how I did for a while and probably will be the same for you, the break-even win rate can be used to indicate the likelihood that a trade will work.
Risking one point for 50 points isn't a magical realization that will make you rich, it's just a trade that has a 98% or more chance of not working. And, when you add the humanness in our brain's desire to see patterns that don't exist, the emotional attachment to money, fear, greed, anxiety, and our attempt to rationalize something incredibly complex into something simple, and more, you will temporarily be underperforming a computer using completely random entries and exits using the same risk-reward as you. I have a video specifically on this topic if you'd like to see more down below.
But this is pretty much all you need to know for now. We're not done yet though, because why would you use the same risk-reward ratio on every trade if the market is different every day? Great question, thank you.
Let's explore that. Alright, using a picture of my trading from On this particular trade, I felt like it was more likely that after the little low of day break at 938, which is what we call when price drops below the lowest price from the day starting at 930, remember regular trading hours, that price would break through the pivot up top. Now, I put the stop loss there because I felt like, number one, that price was more likely to go above that pivot than it was to fall back down, number two, I felt like that stop loss was as close as I could put it to the entry without getting stopped out for reasons irrelevant to what I thought would happen next, and number three, I felt like if price hit my stop there, then it would probably continue going down.
So obviously to avoid taking a bigger loss when a small loss would get the job done, that's why I put it there. By the way, the term pivot is used differently among traders. It doesn't matter.
Don't get caught up in terms and definitions. All that matters is being good at predicting candle go up or down. Looks like a pivot to me, so that's what I call it.
You can call it anything you want. Maybe you'll call it Jonathan. Feel free to rewatch the section about how to use stop losses if that was like, what are you talking about? I ended up making 12 points on this and I would have lost 3.25 points if it had not worked, although the original stop loss was submitted as 4 points away, and then I moved it to 3.25.
Now, if you're wondering about the way I trade, I have a guide on that as well as a big page on my website that's all free and always will be, but don't watch that yet. Only consider doing that after you've done at least a couple weeks of experimental sim trading and just some Overall general trading you need to have a good base of information and experience first so to simplify Let's say I risked four points for 12 points That's a 1 to 3 risk-reward ratio Meaning I only have to be right just over 25% of the time on trades like that to be more than break-even However, most of my trades have smaller targets than that and this just happened to be the example I chose so risk-reward ratios are important for you to calculate your edge and how you can improve But don't put too much emphasis on them You should always take a trade because of price action, not just randomly taking 1 to 3 or whatever ratio trades. They're just a cool metric that can help guide some decisions as you progress. For futures right now with Tradevate and NinjaTrader, you need $100 minimum to trade the micro NASDAQ contracts and $50 minimum to trade the micro S&P 500 contracts. So to give yourself some wiggle room, since that's the minimum account balance required per micro contract, you should put in at least $300.
But it's going to be different for everybody. And anyone who's like, you need to have $10,000 to trade futures is just a stupid thing to say. I just don't know what they're talking about. Also, remember that nothing has changed about me saying you should start on a SIM account for a while and that trading without an edge is just guessing. So don't start with real money yet.
When you eventually are good enough to start trading the mini contracts, which have point values 10 times higher than the micros, you will need $1,000 per NASDAQ contract and $500 per S&P 500 contract. The margin requirements change every once in a while, so make sure to check with your broker. I told you the minimum amount you need in your account, and you can decide how much wiggle room you want to give yourself.
Later, not now. For stocks and options, it gets a little tricky. To actually day trade, you need to have $25,000 minimum, or else your account will be locked from day trades for breaking the PDT rule.
The way around this is with a cash account, instead of a margin account. which is offered by most brokers. Once you do that, you can day trade with as much money as you have in the account when the day began, and then you can't trade anymore until the cash from the transactions has settled.
For options, it settles the next trading day. So, if you have a $500 account and you buy an option that costs $450, then you sell it for $500, your account would only have $50 worth of tradable cash until the next day. The next day, obviously the balance would now be $550 from the win, so that's how much you could trade with for the day. I'm reading on Investopedia that stocks will be settling one business day after the day you trade with them starting in May of 2024. Until then, it's the day plus two more business days.
So, if you have a $3,000 cash account and you trade until you've used all $3,000 on the day, and it's Monday, then you can start trading once the cash has settled on Wednesday. Once again, like, just don't trade stocks and options. That's coming from me who did both and left for futures when I found out how much better they are. I actually left up two videos on the channel of me trading the opening range break strategy on Tesla options, if you want to see that, back when I had nine subscribers. Watch me make money and look how much I lost to the spread, and also look at how clunky and ugly that platform is, which is one of the best in the business at this time for fast options executions.
Interactive Brokers Trader Workstation is what I was doing it through. Anyways, just trade futures. If you're serious about trading, most of you will probably end up there anyways.
How many of you were planning on signing up with Robinhood or Webull and- trading options from your phone. It's okay. That's what I did too. Let's cover this very quickly.
You do not need a super powerful computer and you definitely don't need 35 monitors. Discord is literally more demanding on my computer than NinjaTrader is. The only reason I have two 27-inch curved monitors on either side of my curved 34-inch ultra-wide monitor is because the IRS calls them qualified expenses if you have a 529 education savings account and are in college.
The IRS is like, okay, yeah, that's fine. You can totally buy a brand new computer every year that you're in college. We're not going to allow using the account to cover gas money for driving to your senior year internship, but $5,000 on a computer and seven feet worth of monitors every year is totally reasonable.
Yeah. Trading from your phone is something that is heavily pushed by advertisers and YouTubers because it's just another thing that tricks people into thinking that trading can just be this easy little side gig that makes you $500 in five minutes. People who are actually doing this for a living on computers.
Some of you might eventually trade in a way where you can use your phone to monitor or even take positions, but most of us need the computers for the superior visuals, trade management features, and more. The news. There's a few things to talk about here that you need to know, and I'm serious. Or you risk either having the unluckiest or luckiest day of your life. Look at that 5 minute chart, which remember means 5 minutes worth of price action slash market movement on each candle.
At 8.30 on February 14th, 2023, you The CPI report was going to be released to the public, meaning the change in prices for consumer goods and services, blah blah, snoozefest inflation, blah blah, don't care. All you need to know is that forexfactory.com labels it with a red folder, so it's important and expected to have a big impact on the market. By the way, I use forexfactory.com for checking on scheduled news events. I'm not sponsored, but if they see this and want to send me a new vehicle or maybe a small island, my email is in the description.
The candles leading up to this 830 event had a range of about 10 points on the Nasdaq, which is equivalent to $200 on one contract on NQ. At 830 when the report came out, the candle started at 580, went up to 688, went down to 460, and eventually closed at 615. I hope you were metaphorically peeing yourself maybe a little bit at the sound of that. From the open of that candle, you could have possibly made 120 points, aka $2400 on one contract, Or you could have possibly made 105 points, aka $2,100 on one contract.
Imagine if you were trading five contracts at that time. That's right, multiply what I said by five. Just from not paying attention to knowing that news was happening, you could potentially lose weeks or months worth of progress. Probably not months. Well, it depends on how bad you are.
You might be thinking, so how do you trade news events? You don't. Unless you've created an algorithm or system with proven back-tested results accounting for the insane slippage during the spikes, which you haven't done.
And I'm just saying that because someone who thinks they're clever was going to go, what have you-No. No. No.
No. You wait for stuff to calm down and return to the trading conditions you're good at. Or, if it stays chaotic for the rest of the day, you just stop trading. You also don't want to trade within a couple minutes of these events. because as seen in the candle before the actual report came out, sometimes you get huge spikes from firms and traders probably dumping or loading up on positions.
Yeah, we don't know what they're doing, we just see the chart go. If you go to a one second chart, you can actually see that many of the spikes happen instantly from just one or a few big orders. So for this part, remember to avoid being in positions when important news events are scheduled, and if you don't, you'll only make that mistake once. Probably. Now I'm going to say something that you need to remember, and it's going to make you sound really smart in front of your friends.
Worcestershire. Just kidding. Seriously though, it'll make you sound really smart when you're trying to explain how your job is about staring at candles on a computer screen and thinking the candle's going to move up for some reason and bang, you just made $4,000 in six minutes and now you're gonna sit in your hot tub drinking a margarita or apple juice for two hours. Watching people drive by to go to jobs that make the world go round, and sometimes you feel bad for contributing nothing to society by being a trader, but you compensate for that by donating to charities and being very generous with your money to those who deserve it, like the nice lady at that pizza hut who you gave a fat Visa gift card to because she was kind. Besides the events that are guaranteed to increase volatility, like Fed talks, inflation data, and other stuff I don't care about, surprise is what causes big moves.
Institutional investors and the big traders that actually impact the market have priced everything into their positions, supposedly. When the report about how much sauce the sauce factories made that month is released, the big players are expecting it to be an exact amount. It's priced into their outlook and current positions.
There's a forecast on everything. Maybe. I don't know. If the report matches the forecast, everyone is like, okay, everybody calm down, let's continue. When it's more or less, they're like, holy crap, what the heck, time to do some readjustments because now my entire model about the future is wrong and bang, now the Dow is down 300 points.
And you're like, I don't even know what the Dow is, but it's okay because no one does. Either Walmart is in it or it's in Walmart. Don't be the 10 millionth trader, including me at the start, to think shorting when bad news and buying when good news is a profitable strategy and somehow a new idea.
And understand that surprise is what makes news significant for the most part. Everything is priced in. The people who trade the news successfully have the information before you, most of it, except like the reports that are scheduled, and they're not even people.
They're computers that instantly execute a strategy based on some AI that interpreted the news as good or bad. How are you supposed to beat a computer when you don't even remember how to do long division? It's okay.
I don't either. What time should you trade? I'll be using eastern standard time here. Futures trade almost 24 hours a day, six days a week. The term regular trading hours means from market open at 9.30am to market close at 4pm.
Mother f-what? Oh, Monday through Friday. You can trade outside of this, and we call that trading outside of regular trading hours for obvious reasons. My work week is rolling out of bed at 9 because I can't fall asleep until past midnight, chugging coffee, opening NinjaTrader at 9.25 or so, starting trading at about 9.34, and then ending before 10. If you haven't fallen asleep yet, you might be wondering why I do that. Great question.
At 9.30 when the market opens, we get the most amount of volume and volatility. This means that when... This means that this is when the most amount of trading happens.
It is chaotic and intense, and that's why I wait a few minutes to let it calm down. However, everyone is different, and you'll soon learn what works best for you. You will notice that the market typically slows down a bit from 11 to 3, of course with a bit of variance there. The most action happens in the first hour of regular trading hours.
and it picks back up towards the close at 4, but not as much as the open. I only trade the market open session because when there's more participants and bigger trades happening, the market typically moves more. More movement means more opportunities, because how would you make money if things didn't go up or down?
But let's talk about a tool I use that will help you identify when conditions are good or bad for trading. ATR, meaning Average True Range, is incredibly helpful, and it's the only indicator I use. By seeing the exact size of every candle, you will begin to learn when volatility is higher or lower than usual, because you will quickly memorize the typical conditions of whatever time frame charts you use.
Personally, I trade on a 20 second chart, and I know exactly when volatility is lower or higher than usual based on the size of the candles, which ATR tells me. But remember, if you want it to tell you the exact size of every candle, you have to set the period to 1 on whatever platform you use. It defaults to 14. Let you choose how you want to use it.
This helps to make sure that I'm not trading if it's way too intense, or to consider sitting it out if price is moving too slowly. I will play a section from the video I dedicated to this, and then we'll get into the most common beginner mistakes to avoid. We are currently looking at Nasdaq on a 30 second chart from 11am to 4pm. Up until 1.30 where I have it hidden, we were getting around 5 points of movement on each 30 second candle.
This is worth $100 on the minis and $10 on the micros. Ignoring outliers, the most we were really seeing was 8 points of movements on each bar, and the minimum was 2 points. So 98% or so of the time, we could have expected a 30 second bar to move anywhere from 2 to 8 points. Now, looking at the whole right side from where this huge volatility increase first began, you can see that the dot clusters are way higher up than before.
It went from a 2 to 8 point range to a 3.5 to 12 point range with many outliers above 14 points. So what does this mean for us? Sure.
You might have the same trading opportunities, but it's literally trading times two. The same things are there, but they're going twice as far now. That means twice as much reward, but it also means twice as much risk, twice as many emotions, maybe, sort of, I don't know. certainly scarier. Now obviously you wouldn't trade pre-market the same way you would trade during normal hours.
Looking down below, you can see that most of these candles are ranging from 1 to 4.25 points. Clearly, your stop losses and take profits would probably be smaller, since the chances of capturing a large move are unlikely. The charts always stretch out or become compact to automatically fit on the screen, so we don't always visually see when things are moving up and down more.
So the ATR helps remind us that things are changing. Take a look at this. Remember, this is a 30 second chart and they're moving from 5 points to 14 points each. Look at the candles. This chart looks the same, except these are only moving 2.5 to 7 points each.
Make sure your plans are changing too. When price action is half as much as it usually is, or twice or even three times as much, are you actually reducing or increasing the size of your stop loss and take profit levels? Most common beginner mistakes to avoid.
Alright. Let's rapid fire a bunch of mistakes I'll help you avoid by teaching you the lesson instead of you having to go through it like the rest of us did. Remember to not use real money yet.
Trading is a skill that takes a while to develop, and trading without an edge is guessing. It's gambling if you're using real money. However, once you get something that works, or you're at least ready to be around break-even with real money, do not size up too early. Try to trade the smallest size possible and get used to that for a while. You have to slowly desensitize yourself to the emotions and the intensity of using real money.
You might go through a period of performing like an absolute wizard, but you can't let this euphoria trick you into sizing up. Trading is a marathon, not a sprint. As soon as you think you've figured it all out, that's when you open yourself up to something potentially devastating.
Be patient. At the start, it's not about making money. One of my favorite Mark Douglas quotes from a video series I have a playlist on, if you click on my channel, I'll put it down below, goes something like this.
Making money is just a byproduct of acquiring trading skills. This is especially important as a beginner. since making money isn't going to happen for a little bit. Trade to acquire skills and be process vs results oriented.
You have to, because there will be no results for a while, but you will easily be able to identify your progress as you gain more experience. This will help to motivate you and to not be as discouraged sometimes. If you wouldn't close a trade halfway to your stop loss, then it doesn't make sense to close the trade halfway to your take profit, because you don't want to see a winning trade go negative.
Treat your profitable trades the same way you trade the losing ones. This problem must be overcome. At some point, you will be in a trade that gets closed for a loss after hitting your stop, and then it will immediately go to your original take profit level.
Should you get upset and feel wronged by the market as if it robbed you? No, of course not. You have to try your best to keep your emotions out, because the market does not care about you. If you need to take a 5 minute break, then do it.
Everyone is different, and managing your emotions is something you must overcome. You will learn to develop systems to help deal with the challenges you will face. Never size up after you lose a couple trades in order to win back what you lost in just one good trade.
That is an emotional decision that will hurt you badly. Stay objective or get destroyed. NinjaTrader and Tradeovate both have account settings that will allow you to set a max daily loss amount, meaning an amount that you personally set that will lock you out of your account for the rest of the day if hit, and you can't go in and change it until the day is over.
Let me ask you If you could literally make it impossible for you to make a devastating mistake in a field where almost everyone does at some point, why would you not be like, holy crap, that's awesome, let me do that? Why even allow the opportunity for something bad to happen if you could avoid it? That's why I use it, and I think it would be very not smart to say, no, I'm the exception, and like, really smart, so I like, totally don't need to use that.
Also, in beginning, do not average down on a losing position. This is how a huge portion of traders blow their accounts, including me. There's a joke with trading stocks about how investors start as traders. This is when you buy a position, it goes down, and so your brain thinks, hey now it's an even better buy, so you buy again, it goes down, you buy again. And it's a vicious cycle that ends up eventually destroying you.
It will work sometimes, but when it doesn't, that one time, goodbye everything you've made and more. Stop thinking of what you're trading as if it were a supermarket. Price going down doesn't mean it's a good deal to buy.
Most of the time it means it's going further down. which is something from Tom Hougard. He wrote a very good book on trading psychology, which I have a video on that I will put down below, of the highlights and best parts.
No matter how far down or up you think the market is, and that it has to come back, it will prove you wrong. Do not impose your own beliefs on the market, because it will do whatever it wants to. There's a classic phrase that goes, markets can remain irrational longer than you can remain solvent.
Before I really get into this, remember that there's nothing wrong with using Titan. technical analysis, patterns, and popular systems as long as you understand the limitations, just like we talked about with indicators. Remember that it helps you see information that was already there from a new perspective.
Okay, here we go. As a beginner, you are going to start noticing patterns, thinking you've discovered something new, eventually finding that it's not consistent enough to work, and then you will repeat that over and over again. You will do the same for support and resistance, supply and demand, and every other trading system, constantly moving on to the next shiny object.
For all established trading systems pushed on YouTube, let's make some things very clear. Sometimes it works, sometimes it doesn't, and that's okay. Nothing always works.
However, Every popular video that teaches you this stuff intentionally selects only the instances where they work, while purposefully leaving out when they don't. Those who tell the truth do not get as many views, because people don't want to be told that trading isn't something you can just read a book about and then become a millionaire. Additionally, when you look back on a chart from yesterday or from any time, your brain selects information to ignore and information to pay attention to, tricking you into thinking things like, when it does this, it does that.
Please understand that it's not that simple. and our pattern-seeking brains make starting even more difficult when paired with confirmation bias and the other fun things. Illusory correlations, aka thinking of things being related to each other when they are not, like wearing certain socks when your favorite sports team is playing, happens more in unfamiliar areas due to our lack of experience with them. This is a concept in psychology backed by real research, not just me going, oh man that triangle didn't work so it's all a bunch of baloney.
This makes sense, because our brain is always trying to figure out everything in order to make shortcuts to clear up mental capacity. We use shortcuts everywhere in life, and it helps us be more efficient and to know what to expect. The good news is that these illusory correlations go down as we become more informed about the unfamiliar. But just be wary of this.
These systems are just like indicators in that they add slash reveal nothing that wasn't already there to see. They have no inherent value by themselves, and they are just tools you can use to learn the story that price action is telling. I want you to really pay attention to what I'm about to say.
If the patterns and systems worked on their own, you could get a computer to code them into an automated trading system. If it were as simple as when X does Y when PP is Poo Poo, it wouldn't even take a skilled programmer to turn that into an algorithm for free using something like NinjaTrader's strategy tool for that. If you think you see a pattern that works, prove if it does or not by coding it and testing it.
Sure, the pattern is there, it exists, but it doesn't end with something consistent enough to give you a profitable system. Anybody can make a ton of money on something a couple times, but being a successful trader means long-term consistency, not making money one time because the candle started to look like a triangle and you went, oing-ong, hee-hee, triangle go up. If you have a system that follows specific rules that could be coded without even needing to know how to do traditional coding, then it's incredibly stupid to not automate it with the computer and remove the only factor that could possibly make it not work, which is you. Of course, that's assuming that it actually does work. This is not me saying that algorithms or a systematic approach to trading doesn't work.
Since you're new, you're probably like, yeah that makes a lot of sense, that's obvious. That's right, it is obvious. If you think you've found something, test it out.
If you're thinking, what about all the successful traders using technical analysis? It's because they just use it as a tool to understand price action. They are making decisions based on information they can't describe to us because of the nature of implicit learning.
They are falsely attributing their success to triangles and lines that a third grader could draw, instead of their actual work of spending hundreds to thousands of hours testing strategies, making sacrifices, and working extremely hard over months and years. That is the combination of a systematic and discretionary approach. Remember that when you're a beginner, psychology typically isn't the reason for poor performance until you actually have an edge that makes you profitable.
Psychology is only the issue when you have proven that you have a profitable system or approach, yet you aren't executing it properly for some reason with real money. That's when you know the problem is due to some type of psychological issue. But, of course, there are some big psychology concepts that will help you make better decisions, and that's what I have a ton of videos on.
So, let's essentially rapid fire just a little bit of the culmination of four years of college and hundreds of hours of... of work making these videos. As always, the pinned comment will have links to the videos that explore the topics more in depth.
I've now taught you almost everything you need, and now it's on you to start doing the real work. But I sort of just dumped a ton of information on you. So here's just some things I would tell you as a friend. Losses are normal and there's nothing that always works regardless of your trading strategy.
There's a phrase I like to use for myself that you should use as well, which is process over profits. You're not going to make money for a while, so focus on the process rather than the results. Yeah, it sucks that this is actually difficult to do, but there is nothing more rewarding than succeeding at trading.
I only trade for half an hour, which frees up the entire day to pursue meaningful things, like spending three months on this video. Plus, obviously you could make an insane amount of money. If you could get just 50 points off the NASDAQ a week on five contracts, that's $5,000 a week.
And that's not unreasonable for a skilled trader. Another thing is to try and simplify as much as you can. When you limit the amount of information you are looking at, you can hone in your focus on the important stuff, which is price action.
The brain is incapable of splitting its attention contrary to the beliefs of those who think studying and watching Netflix at the same time is a viable strategy. Remember that no matter what you're doing, trading is only trying to have price hit the profit target before the stop loss. Doesn't matter what happens in between.
That's all there is to it, so keep that in mind as you try to learn the ways that price moves in determining where you think it's most likely to go next. The way I trade is not a way that will work for everybody, but I know several traders who are doing really well with it in a very short time. I think it's a great way to at least start trading because the more trades you take, the more you will learn.
Each time you trade, you will slowly start building intuition about what to target, where to put the stop loss, and more. Of course, this will take several months at least, but it's still a good place to start. You might stick with it, or you might move on to strategies that are much more mechanical and rules-based. You've made it this far, which is incredibly impressive. I would very quickly like to tell you a little bit about me if you still have doubts about my intentions.
You can skip ahead to some important closing notes if you don't care. I'm 23. I've been with my now fiance since sophomore year of high school. We went to college together, me for behavioral science to eventually become a therapist, and she became a nurse.
I decided to finish college to make her feel safer about me becoming a trader so that I would have something to fall back on just in case. I uploaded live trading videos of me learning the opening range break strat in 2021, and after I left for futures, I discovered supply and demand. I decided to absorb as much information as I could over a couple weeks and organize it into a presentation to teach myself. because teaching something is the best way to learn.
Well, one of them. Whatever. I had 23 subscribers when I did that video. Long story short, the algorithm decided to blow it up for some reason, and now it will be at a million views soon.
Kind of funny that the popular trading channels are so bad at actually explaining things that they've been outperformed by that. Anyways, I started making psychology videos because that was the only thing I was actually qualified to talk about. My identity is private and probably always will be because I don't do this for fame or fortune.
I don't care about that. I genuinely want to help people. It's the entire reason why I was going to become a therapist, and it's why I made this video.
Eventually, I will be making so much money from trading, I won't know what to do with it. But until then, you can watch the recordings of me trading live and still learning on my second channel. That channel was made to completely document my journey with futures from day one.
I started with real money like an idiot, which perfectly aligns with how often I've said to learn the lesson from me instead of doing what I did. Important notes. Great job on making it this far.
Just a few more really important notes and then you'll be ready to get started with sim trading and exploring the markets without using real money yet. Do not quit your job, which might seem obvious but you'd be surprised. First of all, this takes a long time.
And second of all, think of all the pressure it adds when the outcome of your performance determines if you get to pay rent. Be smart! Although I don't think anyone who is still here would do that.
In fact, I'd bet all my money that there is a correlation between intelligence or at least reasoning skills to the retention rate of this video and who is left. That is a compliment to you. Get a room, holy. You think these compliments are free? Do not be discouraged.
Setbacks will happen often, and your success depends on the way you learn from them. Take me for example. I was incredibly consistent in making money on one microcontract, aka slash MNQ, and when I doubled the size of my positions because it was time to, which is the smallest increment I could have done, I couldn't handle the pressure of my money being on the line and performed poorly.
So, I say this to tell you that we will constantly be facing new challenges that we must overcome. New ceilings we have to break through. and sometimes we might have to take a step back to take several steps forward.
Trading is really, really difficult, but when you consider the life and the freedom it can give you, that's all the motivation you should need to never give up. Someday, I look forward to be trading 5 to 10 contracts on NQ and reminiscing about how trading 2 MNQ used to be scary. 10 contracts on NQ is 100 times the size of 1 MNQ by the way. One last thing, you are going to hear people make statements about trading all the time, like, the best traders have this characteristic. or the big traders who move the market do this when this happens.
Guys, these people have no effing clue what they're talking about. People say things as if there's actually proof behind their claims. They have no idea. So many traders say definitive statements as if it isn't just a complete guess or some random BS spouted by a YouTuber.
You need to watch out for this, because even traders with great intentions can give you meaningless advice that just isn't true at all and can set you back really far. Remember to be skeptical and to not believe random statements unless there is evidence. I have a Patreon where you can see the videos from this channel early, and I also put a lot of my live trading videos on there exclusively and not on YouTube.
I don't sell anything related to trading, and Patreon only exists as a place where you can financially support me if you appreciate the work I do and what I stand for. It's not like becoming a Patreon is going to instantly make you profitable or you're going to get access to some secret information. Everything I've said here was scripted and meticulously reviewed many times. No pressure to give back to me, but I would really appreciate it if you do. Thanks, everybody.
And remember that I will add helpful information to this on a dedicated page on my website as well as in the pinned comment. I hope this helps you, and good luck out there. I am so excited to never open this document again because this took way too long to make. Wow.