Original subtitles

One thing you probably noticed in this

course is that we don't talk a whole lot

about confirmations, at least in the

traditional retail sense. A lot of retail

traders look for confirmation in the form

of specific candlestick patterns, whether

that's engulfing candles, break of

structure, these type of things. This

module here is to explain why

confirmation, and we put confirmation in

air quotes there, is little more than a

psychological safety net and actually

doesn't provide any edge at all when

talking about confirmation in the

traditional sense. So the reasons we don't

wait for confirmation is by the time you

get confirmation, the market has often

already moved. Now that means you're

entering a trade after the best risk to

reward opportunity is gone. One, you'll

need a bigger move just to break even, and

your stop loss has to be wider or far less

strategic than if you are able to identify

the correct level where a move is most

likely to happen versus waiting for a

reaction first before entering the trade.

By waiting for confirmation, oftentimes

you're trading after the real opportunity

has already passed. So what we're aiming

to do is trade at levels where, number

one, risk is low, and number two, we have

multiple confluences in place that allow

us to have confidence in our entry price

regardless of price action confirmation.

Waiting for confirmation kills your risk

to reward ratio. For example, say you have

a setup that has a hypothetical one to

three risk to reward ratio before so

-called confirmation. After waiting for

this confirmation, that risk to reward

ratio then drops, perhaps down to one to

one or one to 1.5 or worse. Over time,

this erodes your edge, and mathematically,

it becomes more of a losing game, even

with a decent win rate. So in order to

maximize your risk to reward and your

opportunities, you need to learn to trust

your levels and trust your analysis and

get comfortable entering where it may feel

uncomfortable at the moment. Waiting for

confirmation trains you to be fearful

versus confident. And the reason a lot of

retail traders like confirmation is

because it feels safer. You know, waiting

to see the market move first before you

get in on your trade idea. But as we

mentioned earlier, this is little more

than a psychological safety net. And what

we've found is that over the long term,

there's little to no edge in waiting for

this so-called confirmation. It builds

hesitation, causes you to second guess

yourself, and will erode your confidence.

You stop trusting your reads, you become

reactive instead of proactive. See, if

you're a reactive trader, you're going to

be taken advantage of in the markets by a

lot of fake outs, catching the tops and

the bottoms of moves right before they

reverse, just taking outright unfavorable

trading positions. As traders, we want to

become more proactive, identifying key

levels and identifying areas based on

volume-based analysis where price is most

likely to get a reaction. And we want to

preempt these moves before they happen

rather than trying to get in after the

majority of the move has happened. This

type of confident execution is key to a

successful trading career. And it's hugely

important, I cannot stress this enough, to

learn to trust your levels and pre-trade

analysis based on volume and order flow

versus arbitrary retail candlestick

confirmation patterns. See, it might come

as a shock to you to know that a lot of

professional traders in the professional

trading world don't use candlestick

patterns at all. Because candles without

volume and without order flow mean

absolutely nothing other than a quick way

to visualize trends and see where price

has been moving. There is little to no

edge in candlesticks alone. Therefore,

waiting for a confirmation pattern

provides little to no edge either. So what

do we do instead? Well, first, we need to

stop blindly waiting for confirmation.

Instead, wait for those stacked

confluences that we talked about earlier.

Wait for multiple confluences to align

around these key levels. And then trust

the trade. Get comfortable with accepting

that not all trades will work. And

remember that we cannot predict the

future. We are merely placing sensible

bets based on the information we can see.

And waiting for confirmation is doing

nothing more than hurting your potential

risk to reward ratio. And is not allowing

you to predict the future any better than

if you were to go in with a good analysis

and trust your levels. And remember that

now you are trading with a data-backed

edge versus arbitrary patterns that have

no market logic like candlestick patterns.

So with that in mind, what we do is we

allow proper stop loss and take profit

placement to do the heavy lifting for us.

And then we trust our analysis. So what we

are going to go into now is how to

properly place a stop loss and how to

properly place your take profit targets.

And use this to add to our edge and

provide us with more favorable trade

outcomes. So go ahead and complete this

lesson now. This is a bit of a shake-up

lesson for a lot of retail traders who are

used to trading candlesticks. But a very

important lesson nonetheless. Now let's

move on to risk management and trade

profit targets. Now let's move on to

recommendations. We'll be right back.