Original subtitles

here's the thing you will not

become a consistently profitable trader

if you do not have

a systematic approach to your trading

and that is why in today's video i'm

going to be teaching you how to build

a systematic strategy how to build a

trading strategy

that is rules based we're going to be

doing that together but before we get

into that

i would be willing to bet that the last

time you placed a trade

it was based on one of these three

factors factor

one it was based on a signal you got

from a trading guru online

or worse than that it was based on a

signal you got from a telegram group

full of traders that are probably worse

than you are factor number two

was based on a gut feeling some kind of

emotion greed or fear

you thought to yourself i need money

right now so i'm gonna buy the forex

market

buy the stock market you click the

button and you hope and pray

that the market goes in your direction

and number three

is something i call t-o-t which stands

for

tons of technicals you saw a ton of

technical factors coming together and

you thought to yourself

there's no way this does not work out

look at all these technical factors but

the problem is

you're not consistent with which

technical factors you use you have no

systematic approach to this

you're not disciplined you have no risk

management because of that

you're still consistently losing trades

now is this really how you think

professional and consistently profitable

traders

place trades no the top

five percent of traders place trades

consistently based on a full

trading plan that is rules based and

systematic and that's why today's entire

video

will be dedicated to teaching you

exactly

how to do that so with that said i'm

gonna let the intro and disclaimer roll

while i do make sure you go ahead and

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click the notification bell so you're

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make sure to go and click that like

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the intro and disclaimer

just kidding

[Music]

so before we get started talking about a

rules-based and systematic strategy

there's a lot

we need to discuss first starting with

what separates

a losing trader from a winning trader

let me draw this graph out for you

subjective

objective this tends to be the

difference

between a losing trader

and a winning trader and don't worry if

you don't know the difference between

the two yet

i'll be talking about that momentarily

so what does an objective

or a winning trader have that a losing

or subjective trader

does not have and what's keeping this

subjective trader from being able to

create a consistently profitable

trading career well it starts with the

number one thing which is

subjective traders tend to have no

rules in their trading at all and

because of this

it leads them to trading based on

emotions

it leads them to being confused

constantly

leads them to being inconsistent and

frustrated

and right now if you feel any of these

three things

then what i'm gonna do throughout this

whole video is teach you how to stop

feeling these

these these emotions stop feeling

confused stop feeling

inconsistent and stop having no rules

key thing here is we're going to create

rules okay rules are the reason these

things happen

so what's the difference then well an

objective or winning trader

has a set of rules that they follow

every time they place a trade

they have no emotions

they are confident instead of confused

because they have put in the work

to make sure the strategy they're

trading that's rules based makes money

over time and they

are consistent while they trade

so the first step of fixing the problem

with if you are

being a losing trader is to start

with a set of rules and that's exactly

what we're going to dive into right now

i'm going to do a weird funky transition

on the screen and i'll be right back to

talk to you about

the rules based systematic strategy

we're going to be trading

and you're going to be learning today in

this video

so first off i'm going to tell you a

strategy i want you to tell me

is it objective or subjective is it

something a losing trader would use

or a winning trader would use so let's

say i'm using the 20 moving average in

the 50 moving average

and in order for my trade to happen i

need to see

the 20 above the 50

ma for a bullish trade and i trade

breakouts

in the bullish direction when that

occurs

is that objective or subjective there

are rules here so so tell me

write in the comments below this would

be

absolutely subjective

there are so many pieces to this puzzle

that are not in place right now

that if a if i told you to go out here

and try to trade this

i told a dozen people to try to trade it

a dozen people may trade it completely

differently

than one another that is the opposite of

objective and the opposite of what

winning traders do

winning traders have enough rules in

place where i could tell 12 traders to

go trade a strategy

a dozen and they would go trade it most

of them would trade it exactly the same

so now let's take a look at the opposite

of this and how we can make this same

exact strategy

and the questions we need to ask

ourselves to turn it from

a subjective strategy to

an objective strategy

so let's keep our bullish strategy here

and just talk about some of the nuance

rules that we need to put

in it for it to become objective instead

of subjective

well for starters what classifies as a

breakout

and at what point do we need to trade a

breakout

let me show you the exact way that i

personally

create objective strategies every time i

create one

i call it the c-e-s-t c

e s t what this stands for

is conditions

i might have screwed myself on the huh

bear with me

entries

stop placement and target

placement this is how you create

any strategy that you want to create and

make it rules-based and systematic

use c-e-s-t conditions entries

stops and targets again on that last

slide we had

the subjectivity there is you don't know

where you put your stop or your target

that is completely subjective you need

an objective

place you're putting your stop an

objective place you're getting you're

hitting your targets

otherwise you may stay in a trade too

long and let it run against you

you may make the mistake of taking

profits early because you don't have a

designated area for your stop-loss for

your target excuse me

and that's not something you want to do

so let's start with conditions what are

our conditions

of the strategy we were talking about a

second ago well we said we're gonna keep

it bullish

for a bullish trade we wanted to see

that the 20

moving average was above the 50 moving

average

okay that is condition number one that

equals

the trend that we're trading with let me

write c

e s t up here to make it easy for you

guys to remember

so that is our first condition is we

need the market to be in trend

we define trend by 20 ema above the 50

ema with that being the case let's

actually take a look on a chart and see

what that would look like okay

so here we are we're sitting on the five

minute chart of the aussie dollar this

is a trade i'm actually about to show

you a live

entry on that we took earlier today and

hit some pretty nice profits on

what we're what we mean by this 20

moving average above

the 50 moving average is by the way my

black line

is the 20 moving average and my blue

line

is the 50 moving average okay with that

being the case all i need to see is that

the black lines above the blue line that

gives me my first condition

let's dive back over to the laptop so if

that's condition number one

now what do we need to see well for a

breakout i want to see some type of

pullback so the rule i'm going to say

is that the market must touch

the 20 moving average

before i place a trade that is going to

give me my pullback

so now i have a rule for the pullback

the amount that i need

and let's go ahead and take a look on a

chart to look at that as well

so on the chart that just means that i

would need a market

to make a new high and then pull back

and at least touch

the 20-period moving average but wait

wait wait

what if this market goes way lower than

that it starts printing candles down

here

below the 50-day moving average am i

still the 20 hasn't crossed yet does

that mean i'm still

in a bullish trend okay so i need a rule

here what's the rule going to be

well my rule is going to be that the

candles

cannot close

below the 50. okay so now i have

my remaining in trend another trend

condition

i have that i can't see we'll go back to

the charts we can't see

the market start closing below the 50

ema

with candles if we start closing below

it it invalidates the trade and i can't

look for a trade

this is how specific you need to start

getting i'll speed this up a little bit

what do we classify as a breakout well

for me we'll stay on the chart for a

second

i classify breakout as a break and close

above the highs of this previous

swing high so if that's the case then i

know that i have

my conditions set these would all fall

under the category

of conditions okay now for an

entry what did we just say my entry is

going to be

a close above

highs of previous swing high so a close

above the highs is my entry so now

what have i done now i have my

conditions i have

my entry all that's left to do is create

an objective rule

for stops and targets this is how you

create a completely

objective strategy there's no more

guesswork here

i don't have to guess when i'm supposed

to take a trade any longer because now

i have this set of rules that i can

follow a systematic rules-based approach

to every time i want to place a trade

and that is what i'm going to show you

right now i'm going to show you a live

trade

i took on this pair earlier today let's

take a look at that i'll be right back

what's up guys i wanted to give you an

example of a live trade using the

strategy you're learning here today we

have our resistance level

looking left right here the market has

in fact made a brand new high

pulled back touched our 20 period moving

average

right here and we have not closed below

our 50 period moving average right here

with that being the case

as soon as we get a break and close

above this level of resistance we have a

valid trade

i'm actually getting in a little bit

better because we're seeing this

pullback right now

so let's go ahead and click the buy

button on this trade and we are

currently

involved so i'll keep you guys updated

as this trade plays out and we'll watch

it

as the market moves either hit our

stop-loss or target

so here we are looking at this trade

once more we're a little bit in profit i

was really hoping to get about 18 pips

out of this trade so i'm not gonna close

it out

yet but i'll keep you updated as this

trade plays out what's up guys we just

took profits here on the breakout trade

we took live

earlier we ended up with about 18 pips

on this five-minute chart which is not

bad at all something like actually about

16 pips we ended up with about 16 pips

not too bad considering our stop-loss

was around

six to eight pips so we did get a 2-1

risk reward out of this trade i just

wanted to show you the results of that

trade

all right so there was our trade and the

results of that trade

it ended up working out for a profit it

won't happen like that every time that's

the importance of testing there is so

much more that goes

into a profitable trading plan than just

the strategy but the very first step

that you have to take is creating an

objective way you're going to trade

with no subjectivity or as little as

possible and that's going to be the

hardest part that's why i wanted to give

you the strategy today

we're going to go through and actually

i'm going to explain the strategy in a

second but let's first talk about the

mindset you must have

a strategy you could learn as many

strategies you want to

if you're not willing to put in the work

to back test that strategy so you can

gain

confidence in it if you're not willing

to put in the work to create a risk

management plan that you're comfortable

with

then you watching all these youtube

videos is completely useless

you're not going to get anywhere if you

don't put in the work that is necessary

you're not gonna get anywhere if you

don't have the patience to wait for your

trades

don't just jump in the market and be

greedy you need to wait on the perfect

situation

every time for you to be able to place a

trade and that perfect situation

only aligns when all of your rules align

outside of the strategy you have to have

a risk management plan in place

that keeps you comfortable that keeps

you from blowing your account completely

because guess what if you do that

you just joined the 95 percent we were

talking about

and the way you don't do that is by

having an objective

rules-based way to trade a strategy that

provides an edge over the market

and not risking your entire account

because you're trying to get rich quick

4x is not a get-rich-quick scheme forex

will not make you rich in the next six

months

i promise there's no way unless you're

starting

with a huge account and you're a genius

so you're gonna learn how to do this in

a week

then maybe but outside of that weird

scenario

forex will not make you rich over the

next six months

i know that hurts and i know it sucks

and if that if that's what you wanted

you can go ahead and click away from the

video

but if you want to learn how to trade

properly if you want to learn how to

become a consistently profitable trader

that is exactly what i'm teaching you

right now it starts with an objective

strategy let's take a look at the chart

here

and talk about this strategy let's go

ahead and dive deep

into the rules that we've already

discussed take a look at a couple

examples this was a bullish example

and let's see how these rules played out

okay objectively

we're waiting on the black line to be

above the blue line to put it simply

that's the 20 moving average above the

50 moving average we are then

waiting on the market to pull back and

touch at least

the 20 moving average that happens here

right completely objective

we cannot see any candles close below

the blue line do any candles close below

the blue line

absolutely not so that is an objective

rule that is met we then need the market

to break out of

the last swing high the close of that

candle is going to be our

entry so we have this candle here

that breaks out we have the close of

that candle right here i entered a

little bit late so i got to enter a

little bit lower

the stop loss was one atr below my entry

candle if you don't know what an atr is

it's called atr's average true range it

shows you the average of the last 14

candles

so you can place a stop loss based on

the volatility of the market i'll put a

link

to a video i did all about the atr

indicator in the top right hand side of

your screen

after that happens let's go ahead and

pull out our position tool

we enter we have a stop loss below

our entry candle about right there

and the market pushed up i ended up

exiting this trade for about a 1.5

to one risk reward a little later on in

the day

so what we'll do now is i'm going to

bring it back over we're going to talk

about a

bearish example and we'll just scroll

the chart back i have not looked at this

whatsoever let's scroll the chart back

find a bearish example of this

so first off would this be

an entry this big red candle right here

would you be entering on that candle

hopefully you said no the reason is

because the black line

is above the blue line therefore we are

not in a downtrend according to our

objective rules

you don't jump into trades because you

feel like it you don't jump into trades

because you're greedy and you just want

money right now that's not how forex

works

the market does not care if you want

money right now you can lose your life

savings in a

snap of fingers with this market

the way you avoid that is with risk

management and a rules-based approach

that keeps you

from being greedy and just jumping in

because you feel like it if you haven't

heard by now

emotions do not belong in trading

whatsoever

and 95 of traders use emotion retail

traders

use emotion and that's why 95 percent of

traders fail

i don't want you to fall under that

category so right here would not be an

entry

where would be our first entry well we

can't see one on the chart yet right

would this be an entry if we close below

here no we closed above

our 50 moving average that tells me that

the market might head higher i don't

even want to

deal with a breakout situation in that

case so i'm not i'm not willing to place

a breakout trade

right then what about now now we have

the market pulling back down

creating a low pulling up touching

our 20 moving average not closing above

our 50

can i place a trade below this low

if i get a breakout hopefully you

said yes absolutely why because all of

our rules are met

we have a market pushing down the black

line is below the blue line right

we have a pullback that touches the

black line or 20 moving average

the pullback does not start closing

above my 50 moving average

telling me that that 50 is providing

resistance and this market's likely to

fall

we then see a close below candle right

here

that closes below the latest swing low

before

that pullback which is right here in

that situation

my trade would look like this i would

have a

entry at that candle this the atr here

is three pips so we have three plus

three about a six pips top loss that

does not get hit

and we look for i personally look for

about a 1.5 to one risk reward

it needs to be objective but set targets

however you feel like it i personally

like to do about a 1.5 to 1 because most

of the strategies i trade

went at about 60 that gives me a really

good advantage over the market

over a long period of time and over a

large sample size so that was a bearish

version of the strategy

super simple strategy you can go back

and read through the rules that were on

the laptop

but again i want to dive into the fact

that

this is not all you need you might lose

three or four in a row

using this and you've probably been

through this situation before and if

you're new

please don't fall into this category

there's so many traders that learn from

someone online and then

go out and expect that strategy to win

every single time because they learned

it from someone

who has half a million subscribers on

youtube

that doesn't mean it's going to win

every time i'm not psychic i've never

found a strategy

that wins over about 70 of the time and

to get that

70 percent i had to go below a

one-to-one reward to risk ratio

so don't expect magic out of any

strategies another thing you have to

remember

is to lower your expectations a little

at least you're not going to get rich in

six months and you're definitely not

going to find a strategy that wins 100

of the time so if you learn a strategy

like this

it is your job i can't do it for you i

can teach you a strategy

in 20 minutes that is proven to make

money over time

but i can't go out and back test that

strategy for you

so that you have the confidence to keep

trading it through drawdowns when it

starts

losing three or four in a row but

inevitably it comes back

afterwards you won't make it through

that drawdown because you

have not decided to take the initiative

put in the effort

and back test it yourself that is so

important

after you back test by the way i'm just

going to break down the exact steps you

need to take

back test this okay take it through

historic data test 100 trades

on your favorite pair try pairs that

trend a lot pound pairs trend a lot

yen pairs trend a lot why don't you try

the pound yen probably be a pretty good

idea

so with that being the case you test

that for 100 trades in the past guess

what if it didn't work

out of the past 100 times that you

tested it

on the pound yen let's say and what i

mean by didn't work is that

out of those 100 if you didn't win over

55 of them

if you didn't win over 50 of them with a

1.5 to 1 risk reward

then it's not if it didn't win over that

period of time

why would you want to trade it in the

future this is why you have to test

things

that you learn from me or anyone else it

doesn't matter

just go out and test it yourself to

ensure that it's profitable and to give

yourself the confidence that you

inevitably need

to get through drawdowns that will

happen so that's the back testing part

after you backtest in order to gain even

more confidence you need to go through

and demo trade to make sure you can

accomplish this strategy

on your schedule with your daily job

with your daily obligations whatever

they may be

and it also is going to help you build

confidence people constantly ask me

stephen how do you become patient

how do you get more discipline those are

the two steps you take

stop trading with a lot live money

you're not going to get more patient or

be more

disciplined if you're constantly losing

money you're just not

so the the plan of action needs to be

that you take and test a strategy

you then demo trade that strategy to

prove to yourself you can actually do it

with all the obligations you have

outside of trading

in life and then you can consider

going in the markets with real money

only after those things are done

because guess what as always we have

any anybody that's a professional trader

has mastered

these three things i i do this a lot and

it's because this is one of the most

important

parts of trading and it's one of the

things that allowed me to become

profitable and that is what i call the

triangle of trading success at any point

that you become profitable the reason

will be because you mastered

these three areas of your trading that

what i call the triangle trading success

in the middle of this triangle is you

making money on the outskirts of this

triangle

number one is exactly what we talked

about at the beginning of the video

it's this this strategy that's rules

based and easy to follow

it is your strategy that is the first

step in anyone becoming a consistently

profitable trader

is finding a strategy that makes money

over time

second is a risk management plan

that keeps you from blowing your account

initially

you can't blow your account because then

what are you going to trade with right

but you want a risk management plan that

doesn't really just

keep you from blowing your account it

also keeps you from getting hyper

emotional

during your trades from freaking out if

you lose two in a row

you need a risk management plan that

keeps you from doing that you also

need the discipline

to follow these other two parts of your

trading plan the way you get that

discipline

is through back testing and demo trading

i hear it all the time

back testing's irrelevant it's just dumb

to do back testing is what gives you

confidence

and ensures that you're trading some

kind of systematic

rules-based strategy that's made money

over time

this is the only it's the only measuring

stick we have we can't predict the

future so if you're not going to predict

the future and you're not going to look

at past

historic data how are you going to learn

how to trade

then what right that's why i always harp

so much

on back testing and on demo trading to

improve

discipline of any trader out there

if you're having trouble with that those

are the things you need to

do that said i hope at this point you

have everything you need to take

a strategy whether it's this one or not

make it rules-based as possible

with the cest system that we have right

here

make it as rules based as possible

and start to become a systematic

objective traders that you can start

your journey today

to a more profitable tomorrow i sound

like a

sci-fi movie or some kind of like weird

commercial but seriously if you start

doing this today

it'll increase your chances of becoming

a profitable trader dramatically

and that's why i wanted to push this

video out to you guys if you enjoyed it

click that

like button if you would like some more

advanced training and know

the strategies that i come up with and

use on a daily basis that we just added

a new piece to the eap

training program it is called the

strategy lab which means i'm going to be

putting

all of the pudding it almost sounds like

i said pudding that you eat

i'm going to be placing all the

strategies that i create

over the next six months year however

long that i create into the strategy lab

that way you'll have a chance to see the

newest strategies that i'm working on

i think that's a very powerful tool if

you want to get more info on the

advanced training it is linked in the

description

labeled eap again i hope this video was

valuable if it was please click that

like button

comment below if you last until the end

it was a 30 minute video

good job if you last until the end can't

wait to see you guys

in the next one with that said i'll talk

to you very soon wish you good luck and

good trading

see you then