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a trading plan pretty much does what it says on the tin right it's essentially
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just a document that describes your systematic approach to trading your
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defined edge in the market with your entry exit and risk management rules
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so in simpler words your trading plan is just your training strategy written down
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pretty much right now you will have this plan either
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printed out on your desk or on the wall beside your computer or at the very
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minimum have it on your notion dashboard just to make sure that it is somewhere
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that you can easily access it especially all times when you are trading because
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you will be reading this before and during every single trading session so
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that it is constantly at the forefront of your mind because this literally will
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be your trading bible now over the course of the next few modules you're
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first going to create your own individually tailored training plan
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and this will initially be a very rough and basic plan because you have not yet
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had the opportunity to actually test your plan to trade it and to figure out
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exactly how you want to trade the strategy
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but before you can actually start that process of testing and trading you
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obviously need a plan as a starting point right because you need that plan
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written down you know first in order to actually be able to test that plan
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you can't just start firing into any old trade that maybe you think resembles a
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strategy because that's just going to be a recipe for disaster and any data that
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you might be collecting it's going to be pretty much irrelevant
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at that point because you know the data is not a part of a defined strategy
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so the first step is just to get your very very kind of rough
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first draft of your plan written down and then everything will build from
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there so once you have that first draft you will then begin the testing phase
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which is what we will cover in depth in the next module
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and then once you've tested it and you've collected data to prove that it
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does have a profitable edge you can now begin to start to trade it in the live
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market and see how you get on then as you gain more experience you gain more
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data on how your trading plan you know how it actually plays out in the market
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you can then refine your plan make improvements and evolve it based on that
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hardcore data that you have collected to actually improve your edge even more
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and then finally you will then create your next version of your plan
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and repeat the entire process and this process will continue for the rest of
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your trading career your trading plan is literally a living and breathing
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document which you will always be evolving as both yourself and the market
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evolves with it now obviously when you create a new plan
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or even just a revised version of your plan
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and once you've tested it you don't have to start trading it live or on demo
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straight away you of course can keep refining your plan based on your testing
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data until you get it to a stage that you're
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pretty happy with you know and then you can start to trade
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it live once you've got it to that point
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so that's pretty much the journey that we're going to go on together throughout
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the next few modules now if you can't describe what you are
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doing as a process then you don't know what you're doing
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so your eventual goal is to have a full flowchart diagram
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that describes the complete end-to-end process of your strategy with an if then
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and a yes no format so a robot could almost literally execute it for you
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now as you've probably experienced i've been thinking as you've been going
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through the technical analysis lessons there is quite a lot of moving parts to
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the strategy and it definitely can be pretty overwhelming when you're first
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learning this style especially if you are brand new to trading in general so
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creating a training plan it can seem like quite a daunting task because your
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level of understanding and your experience with the strategy it's still
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in its very early and premature stages and don't worry that's absolutely normal
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and okay so you know don't worry stress about that but if you follow the steps
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as laid out in this course if you continue to study the content and if you
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continue to put in the hard work it's literally only a matter of time before
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it will all click and it will all become extremely simple and second nature to
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you whereby you achieve that fourth stage of competence remember that's when
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you are unconsciously competent where you can drive your car home and without
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even thinking about it you will get to that point with your training but then
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you can literally boil your your training plan you can boil it down to
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just a few key words that you you look at before and during each training
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session and those key words those keywords of kind of your your simplified
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training plan that will encompass all of the detail and the complexity of your
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process that you now subconsciously understand
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but simple can be harder than complex you
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have to work really hard to get your thinking clean to make it simple but
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it's worth it in the end because once you get there you can move mountains
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so i knew someone who was a chef and quite early in their career they had a
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bit of a tendency to make their dishes extremely complex
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because you know understandably they thought that was how things worked
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more stuff on the plate must equal more skill and therefore surely that must
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lead to more rewards right but then this young chef he went to a michelin style
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restaurant and at the time it was regarded as one of the best in europe
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and the head chef at this restaurant he was a fair bit older than him
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and he had been in the game for a very very long time and this michelin star
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chef he only ever put just three things on the plate just three things nothing
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more and the simplicity blew the junior chef away
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but more than that it was the level of execution of those ingredients that
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impressed him everything was simple but literally perfect
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so after his meal the junior chef went and spoke with the michelin star head
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chef of the restaurant and the head chef told him that he had also gone through
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kind of that exact same process as him when he was younger as well when he was
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starting out in his career where he initially he kind of found himself over
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complicating everything and trying to make these really high
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complex meals but the michelin star chef he said that
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he was thankful that you know he'd gone through that journey because the
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complexity of his approach initially that complexity that gave him the
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knowledge that was required in order to now be able to execute the simplicity of
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his dishes perfectly so the lesson here for us
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is that elegance and consistency that actually comes from simplicity
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that simple recipe that he now has but to get to that level of simplicity
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first you need the deep understanding and that deep understanding that
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actually comes from the initial complexity
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so what i'm trying to say here is that your first few initial versions of your
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trade plans they might actually be quite complex
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you know when you're writing out a lot of your process and there'll be a lot of
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words and a lot of explanation and that's fine because that can you
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know really really help you at the start but eventually you will find kind of as
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you go along and you get more experienced and you kind of really
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refine your style you will boil it down to just a few key
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sentences on one page so you should end up with one very simple trade plan and
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then also your full enter in process laid out as a separate flowchart diagram
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alongside that but of course you know that short
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simplified trade plan that is what you will be looking at before and during
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every single training session now there are a lot of things that you
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can include in the contents of your plan but i recommend that you have these
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three components as the bare minimum so as long as you define how you will
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enter the market how you will then exit your positions out of the market and how
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much you will risk on those positions then you are pretty much good to go
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so the very first time you create this you know make it simple or as complex as
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you need to but just get something down for all three of these sections because
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you just need something that you can then go and test and then once you're
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testing it then you can you can start that process of refinement but you just
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need the starting point so you know don't try and kind of
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perfect it straight away because it's pretty much going to be impossible just
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make sure you get going now there are of course other sections
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that you can add such as you know diagrams of your entry model screenshots
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of actual trade examples from your plan you may want to list the specific
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trading hours that you will trade within list the pair or pairs that you actually
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trade and you know if you trade multiple pairs
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you may have you know slightly different rules for each pair um and i haven't
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listed it here but you can even go you know in a lot of detail kind of your
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risk management and your risk limit rules as well so of course this is not
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an exhaustive list but just something to get you thinking about
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now in the next lesson i will show you kind of a beginner's trading system that
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you can use as an example to kind of see how this could potentially all be laid
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out for you now training is an individual sport i
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can teach you the theory and i can show you how i trade but ultimately the
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responsibility falls on you and no one else it's just you who's gonna be
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pressing buy and sell no one's going to do that for you
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you are here to become an independent and consistently profitable trader
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that is going to require you to build develop and evolve your trading plan
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into something that is unique to you of course it will still be heavily based
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on the core concepts but you then need to take those and mold it into something
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that makes most sense to you that suits your training psychology and that you
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can actually execute with your current lifestyle and your current routines
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you know trading it's not rigid with very hard and fast rules people make
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their own interpretations based on the theories and the concepts provided and
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trade what they believe to be right there's a million ways to make money in
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the markets odds are that you're not going to be
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good at scalping day trading swing trading and position trading if you try
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to do them all you will most likely end up being you know a mediocre jack of all
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trades and a master of none so don't spread yourself too thin at the
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surface level because to truly reap the benefits of one strategy you have to
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sacrifice the others identifying what you should focus on and
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specialize in is where that compounding momentum will take off
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so go deep on that and specialize because that's where your processes and
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your results will become more predictable scalable and sustainable
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style drift comes from not clearly defining your strategy and your goals
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as a result you won't stay with your approach through the thick and thin
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if you are a short-term day trader you must recognize that exiting a trade you
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know for a quick 50 pip profit only then to watch it go on for another 300 pips
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that is of no real concern to you because you specialize in and operate in
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a particular zone of an instrument's price movement but someone else they
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might operate in a totally different area of the curve but both traders can
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be successful however if you are a longer-term trader
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there's going to be many times where you are running in a decent amount of profit
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but only to give it all back in the pursuit of trying to capture a much
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larger move but the key is to just focus on a
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particular style and then once you define your style and your objectives
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will then become much easier to stick to a plan and to attain success
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and then in time you will be rewarded for your sacrifice with your own
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speciality and it takes the same commitment that
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you would make in a relationship you know how good a marriage do you think
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you would have if you kept cheating on your spouse a trading strategy is the
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same you need to be faithful to it for it to give back to you
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because just because we can do something doesn't mean that we should do it
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so if we know that if we spread ourselves too thin up here you know on
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the top surface level it's very unlikely that we're going to really reap the
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benefits of a particular style of trading unless we dig deep down into it
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and specialize so we know that digging below the
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surface that is where the oil is that is where the treasure is and that is where
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the real gold lies so when we are up on the surface and we
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can see all these different ways of trading
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how do we know where the oil is below how do we know where to start drilling
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down to the surface because one way to drill would be to
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just start you know randomly driving all over the place and just finding out you
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know through process of elimination where that oil is and where the gold
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lies that's going to be quite you know time inefficient and you could waste a
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lot of money you know drilling down into all the wrong areas right
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so that begs the question how do we work out exactly where it is that we should
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spend our time and where we should spend our resources drilling down into to find
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that oil to find the gold that looks deep beneath the surface
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well there are a few steps to this first you need to get real with exactly
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who you are and where it is that you want to go
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because once we identify this we can then move forward and determine
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precisely what actions you need to take to get there
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and this is the time to get real with yourself so you can map out a clear plan
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of action and move forward unimpeded so there are four main steps to figuring
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that out and the first step is to very clearly define your trading goals so
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what are you trying to achieve and why but you must also consider your current
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lifestyle so what are your current time constraints and commitments and then
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it's time to dig deep into your training history and your journey so far you're
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really looking under the hood at everything the good the bad the failures
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and put out all of the lessons that you can find from here because there will be
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many if you spend the time to look hard enough
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now of course if you are new to trading or you are new to this strategy then you
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will not have a relevant training journal just yet to go through now so
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this step does not apply to you just yet but these steps the next two steps we're
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going to look at number three and number four they are for when you are refining
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and improving your already established trade plan
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so you know you will study your trade journal to try and identify the patterns
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and commonalities within your past trades so that you can implement rules
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to help you to do you know more of what works and to do less of what isn't
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working for you and then once you do this you will
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pretty likely find that you're going to identify some
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some psychological blockages that you may have that are actually holding you
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back but once you identify those
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first you know you must find out exactly why you have those blockages and then
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you can implement steps to help you overcome them so that they no longer
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hold you back and limit your growth and now you will be able to rise to that
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next level so spend some time getting very clear
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and honest with yourself on what you were trying to achieve and why
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because if you want to become a full-time trader then it will most
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likely make sense to develop a strategy that's quite active maybe hands on you
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know maybe on the intraday time frames because you will be able to you know be
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at your computer screen undisturbed but if you want to trade around your
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current job or maybe even running you know another business that you own or
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you work within of course this is also possible you know contrary to what
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instagram might make you believe you don't actually have to quit your
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nine-to-five job to be considered a professional trader
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but you must be realistic and adapt your strategy to work around your job or
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business you know you will not be able to be on the charts and you're probably
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actively trading the same way a full-time trader can be
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now it's very similar for if you are someone who wishes to travel and trade
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you will most likely want to either develop a longer-term hands-off strategy
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where you are setting risk entries on the longer term time frames with kind of
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that set of forget management or go to the complete other extreme and maybe you
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just want to day trade you know one or two days a week for example where on
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those days you do not travel or explore that day but you dedicate those days you
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know that that time solely to training so when you're thinking uh you know
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about your training goals do not focus on that sort of end result
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you know i.e you know you want to replace your income with the
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trading profits instead focus on the process and the lifestyle
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you know what lifestyle do you want to live
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because it's that lifestyle and that process that is actually going to get
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you that result it's very common for people to want the
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monetary results that successful training can bring but it's not so
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common to desire the lifestyle that that result requires
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now by lifestyle i don't mean you know what house you're going to live in and
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what car you're going to drive what i mean is what is your everyday
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life trading routine going to look like to achieve that result that you want
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each day so start thinking about this now
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then once you have a clear idea of what your goal is and what you're trying to
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achieve with your training then you can start to plan out the steps that you
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need to take to get there and a big part that is going to determine what steps
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you can actually take will be what your current lifestyle is so what are your
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current time constraints what commitments do you have
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do you have dependents you know do you have young kids or maybe you care for
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someone do you have a nine-to-five job if so do you have regular access to your
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trading charts now think about what time frame can you
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actually enter on what time frame can you manage your trades on is it
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realistic that you will be able to monitor the one-minute chart for entries
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during work you might need to drop your ego a little bit don't worry about
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trying to get you know a two pip stop and instead build a trading system
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around the m15 risk entries for example you know maybe using the m15 or even the
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four hour for entries that could be a lot more sustainable for you and you'll
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actually have better results in a quicker period of time so maybe you just
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need to you know look at a few more pairs if you're going to be looking on
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those hard time frames and that will be looking you know working better for you
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and if it's just not realistic to split your focus between your job or your
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business or maybe you do something that means that you don't even have access to
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you know the internet or your computer when you're working then swing training
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will probably be a lot more realistic for you right focusing on those hard
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time frame moves now another major thing to consider is
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what time zone do you live in for instance if you live in new york
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and i believe you are in the eastern time zone then the london session starts
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around 3am for you so are you going to get up early to be on
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the charts for you know 3 am how realistic is it that you can then
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trade the london session through the early hours of the night and still
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perform your job during the day and keep your health and your mental well-being
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intact because some people can do it and they
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feel that the sacrifice is worth it but most can't so figure that out and be
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honest with yourself and just pick what is most sustainable
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and maybe you can you know even look at concentrating on currency pairs that
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sometimes move more during the new york session and even the asian session so
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pairs like aussie dollar and the japanese pairs um you know the
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japanese yen pairs and specialize in those
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now if you really want to hang out on the beach and you want to travel the
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world then you should probably work on swing trading or even position trading
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strategies because it's not really that realistic that you're probably gonna
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have you know great wi-fi on the beach or by the pool and you know the sand in
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your laptop or the sun glare on your screen
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it's not really realistic that's going to affect your trading intraday right
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but if you like the excitement of facing a new trading day with a clean slate
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just training for a few hours then day trading might be for you
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now you might think that day trading sounds sexy but if you have a demanding
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job and two kids maybe it's not that realistic for you
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right but only you are gonna know this but
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just try to be honest with yourself now and you'll save yourself a lot of time
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and headaches you'll find quicker success but more importantly sustainable
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and scalable success you know by sticking to what you can
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currently execute so design your trader plan around a style that actually fits
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that obviously then once you achieve your
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goal and your lifestyle changes then you can adjust an adapter trade plan to fit
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that right now as i said the beauty of the strategy is that it's based on price
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action you know i've shown you the blueprint and all the tools that you
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need but now it's down to you to kind of take that and tailor all of that and
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tailor that strategy to suit your lifestyle
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now we'll talk about journaling a lot more in a future lesson
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so we're not going to cover this in depth now but kind of a quick point is
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that when you are revising and improving your trade plan you know going forward
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analyzing your trade journal will play a large large large role in this so you
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will essentially be trying to look for repeat patterns and commonalities in
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your winning trades and then the same for of course all of your losing trades
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so this way you can work out how you can do more of
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what is working and less of what isn't so that you can implement new rules into
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your trade plan to avoid repeating those same failings now don't rush this
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process it's not glamorous it is pretty boring not gonna pretend it isn't but it
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is one of the single most effective things that you can do to make a quantum
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leap forward with your results because if you spend a week a month however long
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it takes you to do it properly get it done the lessons will be in there some
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of the biggest lessons and improvements that you can actually make with your
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training will be in there you know digging through your journal
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that is the work that other traders they just simply are not doing
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so if you do do it you are literally giving yourself a massive edge over them
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and in that previous step where you have reviewed your trading history you will
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probably have found technical problems with the strategy which you can make
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simple kind of adjustments and you know improve with new rules in your plan but
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you will also probably find that you're making the same silly human errors again
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and again so this final step step four it's all
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about finding the why why are you making those same mistakes
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and you need to identify your psychological blockages and there is a
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lot of introspection that goes into this process you know what are the main
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barriers that are holding you back and then what is your plan for actually
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overcoming them the more reflection self-review and
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contemplation that you perform as a trader the quicker you will progress
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for instance you know when you review your journal and you kind of look
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through the data you might spot that you know every time you lost the first two
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trades of the day your results then spiraled and you took a lot more losses
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when this happened so very simply you can implement you
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know pretty simple risk management rule to just stop trading for the day if you
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take two losses for example now this lesson is not about trading
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psychology we will cover this in a lot more depth later
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but for now you just need to understand the four-step process to go through each
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time you are revising updating and improving your trade plan and that's how
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you can define your own you know your own trading personality and actually
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create a plan that is individually tailored to you
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because once you have that you will massively increase the chances of you
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actually adhering to your strategy rules which in turn then increases the
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probability of you achieving long-term consistent results
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now in the next lesson i'm going to show you a relatively basic
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trading system for you to use as an example to see how you can begin to
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structure your own trading plan36588
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