Original subtitles

Okay, so welcome everyone.

Thank you for attending this webinar.

This webinar is aimed particularly at those that are either new to this game or

those that whilst might not be quite new have

found that they aren't really getting anywhere.

Obviously I haven't got any experience battling hordes of zombies even in PC

games but I do have a huge amount of experience trading.

I've done it for 14 years with at least three of those in a prop trading environment.

So, let's enter the realm of the trading game.

Firstly, be under no illusions.

You are on your own and no one is coming to save you.

As I'm sure a lot of you are well aware, this is not your normal job.

Have you ever tried explaining what you do as a trader to a child?

Because I've tried.

You start off by saying, you know, you buy and sell.

And the child usually says, well, what do you buy?

And it snowballs from there and it suddenly gets very complicated because

essentially when you break it down, you're buying something that you never

receive from someone you don't know using money you don't have upfront.

And then you look at a chart to work out what it did in the past to gauge whether

it's a good time to pass it on to someone in the future.

And if you're a day trader like I am, you might spend

upwards of 10 hours a day in front of a computer.

And all the while you're telling yourself proudly that, you know, you're your own boss.

But meanwhile, the market begs to differ because the market tells you when to trade.

And then after an indeterminate amount of time, it decides whether to pay you.

To compound the whole kind of arbitrary nature of this

trading game, you can make a great trade and lose money.

And equally, you can make a horrendous trade and get rewarded by sheer luck.

All of which slows the whole learning process down.

But it does get even more bizarre than that because actually when you look at the

business of trading and you break it down and you look at what you're doing on a day

-to -day basis, it's a business where being emotionless, which incidentally is a

trait associated with psychopaths, is a badge of honor.

It's like we strive for that.

We strive to be emotionless robots.

It's a business which your friends, your family, and your loved ones rarely understand.

And it's a business where if you're lucky enough to learn

the rules, either the rules change or the other players do.

How many times have you seen videos where people

tell you, look at what the big guys are doing.

You know, you spend hours being taught, this is how to spot

what the big guys are doing so you can profit from them.

All with the intention of turning you into a big guy so

everyone can spot what you're doing and profit from it.

It's a business in which you'll regularly experience pain, frustration, worry,

and stress, and where virtually every step you make will end in some form of regret.

Whether it's that you should have held a trade for longer, you should have got out

sooner, you shouldn't have risked as much, and a multitude of other sins.

But when you look at the emotional toll that you take as a trader and you're

thinking it doesn't sound that healthy, you're completely right.

And finally, it's a business in which the market does not

care whether you live or whether you fall by the wayside.

Whether you live or die, the market doesn't care about you.

Okay, it was here long before we all came along

and it's going to be here long after we're gone.

I always get the traders I work with and I always try and tell newer traders to think

of themselves as liquidity providers because that is essentially what you are.

Nothing more, nothing less.

Calling yourself a liquidity provider is a really

impersonal term but it mimics the way the market works.

Because it is impersonal.

Your role is to help others facilitate the trades they want to take.

And actually, if you think about that, then it might help you a lot because

whenever you buy, someone is offering that market out to you.

And when you think it's time to sell and you look to go

short, someone is basically lifting your offer and buying.

What are their incentives for doing so?

Anyone that's been around this game for a while and you've been around this game for

a while is going to know that when you're playing it, you're not on a level playing field.

There are many reasons for that.

And I'll go over a few of them.

There are traders out there that have way more power than us to push markets.

There might be traders that work at institutions.

There might even be central banks.

But they can push the market around.

There are traders out there that have access to inside

information that's not readily available to others.

There There are traders out there that have the ability to act faster than us,

and we know about that with all the controversy surrounding high frequency trading.

And there are a lot of traders out there that have

access to way lower costs of trading than we do.

So when you put just those four things together, in short, we all pay more money

from a smaller pot, we're less informed and slower to act than the competition.

I mean, you really have your fucking work cut out for you in this game.

And the buck really stops with one simple fact.

You are gambling for a living.

And I know newer traders don't like to hear that, and I always tell them it,

because high probability is still just probability.

And what you are doing is you are building a career on the value of your best guess,

and you should never, ever forget that.

Now if you're still here...

After that... Let's do away with some often regurgitated bullshit at the outset.

If you're one of those people that's been trading for years and not getting anywhere

and thinking to yourself, if I persevere, I'll

get there, then you might want to think again.

Because I always see people saying you just need to persevere.

But having perseverance is not enough.

I've seen many traders that persevere that never made it.

If someone does the same thing every day,

expecting a different result, what are they?

Apart from a fucking idiot.

Well, they're also someone that's persevering.

But it doesn't get them any closer to where they want to be.

You can only get better in this game by one way and one way only.

And that is self-analysis.

What am I doing well?

What am I doing badly?

What are my major weaknesses?

And what are the specific steps I can take to become a better trader?

These are the three steps.

These are the things that you constantly have to be asking yourself.

Perseverance is all good, but you have to persevere in

a way that is conducive to you improving as a trader.

Not just simply doing the same thing all the time, which is what so many people do.

The second point I wanted to make here, and I appreciate this is very,

very controversial, but this is the law of attraction.

The law of attraction.

It doesn't work, in my opinion.

Forget it.

What do I mean by the law of attraction?

Well, you know when you see or hear people saying, for example, when it comes to

money, if you think about money, it will attract money into your life.

That's bullshit.

I mean, seriously, that is bullshit.

People saying that if they tell themselves they're rich, they'll get rich.

I used to work with traders that above their screens, they used to have pictures

of lamb bikinis and a villa in Marbella, and two years later, they ended up with a

flat in Peckham and £30 in their Oyster card.

I mean, I don't know if anyone here follows that stuff, but if you do,

I'm fairly sure that all you're going to be attracting is a bloody disappointment.

The money in this game tends to gravitate towards those that don't care for it.

Those that are trying to attract loads of money

into their life don't tend to get anywhere.

And I have found this to be one of the very few prevailing truths.

Which is why so many people make money on demo and not when they go live.

Because they don't give a fuck, because there's no money involved.

It's the attachment to money that causes so many traders to lose.

Okay, so, presuming that the little reality check of the first two slides

hasn't got you slitting your wrists, let's actually take a look at this market.

The market is constantly moving about, trying to auction for buyers and sellers.

And what happens is that...

The price and time come together to create this excitement.

Let's just think about that concept for a second of price and time and adverts.

This market is like one long TV advertisement.

It's like the selling channels, right?

So these channels on TV that sell you shit all day long.

And if you actually look at the way they work, they use the concept of a fixed price.

So they might start out by saying this diamond I'm selling here is worth 500

pounds, and then what happens is the price rapidly auctions to a new area,

which becomes the bargain price.

So it's worth 500, but hold on a minute, we've

rapidly brought this down to just 25 .99.

And at that point, the clock starts ticking.

And you get the whole time is running out spiel.

And everybody's buying.

Congratulations to Jenny from Manchester and Kate from fucking Birmingham.

I'm pretty much worth it.

Yeah?

I'm listening to you.

And what happens?

I'm You know one minute you are sitting in front of the TV with a beer on a Saturday

night and the next minute you have just bought

some absolute toot off a selling channel.

And if you fall in the trap of chasing the market you are going to end up in the same

boat as the people that buy everything that has

a decent advert or a decent person selling it.

You need to know what you are looking for.

Now it shouldn't come as any surprise to anyone that follows my stuff that I find

that the biggest traps in the market tend to occur at swing points.

So if we have a look at Friday's trade in the Eurodollar we will see that we had a

key swing low at this area here on the charts at 124.99 just beneath the 125 handle.

And you will see that the market comes down to this area.

It breaks it.

It closes above.

We get my swing failure pattern.

And you know it is on a Friday afternoon.

So there is not a momentous rally but that is certainly the low at that point.

As people get caught underneath that prior swing low.

If we move over and we have a look at the Aussie dollar there is an example of that here.

So you will see a deep swing low.

The market moves away from it.

It comes back to it.

It probes the liquidity pool beneath this low.

Then closes above.

And you can see that that is the bottom.

You need to get used to looking at these areas ahead of time.

But the whole concept is not really black and white.

When you are looking for swing failures you don't want to think alright.

Okay.

Okay, I'm going to get in because it just broke a swing high and closed below,

or it broke a swing low and closed above.

You really want to look at the structure that the market makes.

A lot of traders that don't make it in this game, they take a pattern and they

break it down to its lowest common denominator.

You know, a swing failure is a break below, close

above, so I'll trade every single one I see.

And then they're, you know, bitching and moaning that the thing doesn't work very well.

Of course it doesn't work very well if you trade it every single time you see it.

So you've got to look at the structure.

To give you an example of structure, we'll turn

our attention to Cable on the hourly chart.

And I sent out a tweet about this last week.

And I sent out a tweet that said, heads up on Cable.

It's going to trigger a daily trend change to bullish at 61.84.

Look for an SFP.

So that's this swing high that you can see on the charts.

Now what did I get back when I sent out that tweet?

I got a load of tweets telling me where it's going

to go to the upside when it breaks that error.

I was looking at that area.

Admittedly, it didn't form a swing failure.

But why was I even looking at that area?

I was looking at that area because it's a beautiful

area in terms of the structure for a stitch up.

If you have a look at the daily chart of Cable, you will see that there was a

potential trend reversal coming in at that point,

which is why I was looking at it in the first place.

So you can see that the market has made a low here and a high up this point here.

And then a lower low, lower high, lower low, lower high here.

The market turns down and at this point, it makes a higher low.

And when that happens and as it starts to move up from there, traders have got an

indication that there might be a higher low.

We don't know yet because it's, you know, we only know that with the

benefit of hindsight after it's rallied away from there.

But they will be looking at this area here, the last

swing high, to see if we get a change in the structure.

And if we get a change in the structure, then the market moves from bearish to

bullish as the market moves through that area

and you get longs initiating, shorts puking.

It's a beautiful area for a trap.

But I haven't just gone through the cable chart and randomly picked out a swing high

and said, all right, you know, if it breaks that and closes below,

I'm going to go bulls deep short.

You see, you have to look at the structure.

It's absolutely essential.

Now, another question to ask yourself when it comes to

even this simple pattern is how is the market moving?

Because if you get velocity through a swing point, you're going to get volatility.

It's even better.

And let's take a chart and actually study it for a few

minutes with reference to the concept of volatility.

So I'll pull up a chart of the S&P 500 here.

And what you will see is there was a swing low here.

That was at 19.18 and a quarter.

The market traded into it, broke it by a tick and went absolutely vertical.

So we've got the break below, close above, which

admittedly, if you're trading it as a swing failure.

You know, you're paying up a deal there.

But you can see with the resulting rally that it went absolutely parabolic.

But that aside for a second, let's just have a look at this market and what the

participants might be doing when it comes down into that area.

And we're going to look at four different groups of traders.

We're going to look at the traders who are on the sidelines.

They're not in the market, but they're bearish.

They're feeling bearish.

We're going to look at the traders who are sidelined

and are not in the market, but are feeling bullish.

We're going to look at those who are already long.

And we're going to look at those who are already short.

So we'll cover the whole spectrum.

Now if we look at the first group, which is those who are sidelined but

bearish, this move down here is very likely to tempt those traders in.

Because what these guys are going to be looking at is that

they are going to look at an area of previous structure.

They're looking at a new area like here and they'll

use that as a reference point to make decisions.

Now in the retail mindset, they look at the speed, the way which this market moves

down into this area which is pretty high volatility.

And that encourages them to take action.

And so as they're seeing it collapse quickly into that area and seeing how

quickly it's moved and they're getting that age-old feeling of shit, if only I'd

sold up there, as it goes to a swing low, they

start to think, it's moving very quickly here.

If it breaks that low, it could trigger a bid.

But they're not going to be sure that they're going to

A big move and they are tempted to get into the market.

If you think about another group, those that are sidelined but they are

potentially bullish, you think they are going to buy that down there?

I mean there might be guys in the room here that

will say, yeah I'd buy that, yeah I'd take that.

But a lot of traders won't.

And the reason they won't buy it is because as it's

coming down there, they are going to think, fuck this.

There is no way I'm buying that.

You must be mental.

Never try to catch a falling knife.

Look at the way it's moving.

It's collapsing down into that area.

There's a key swing low.

It opens up a much bigger move.

And I'm not going to buy it.

I'll trade with the trend, not against it.

Take the third group.

Those who are already long.

Maybe they bought somewhere in this area here when it looked

like it was trying to carve out support ahead of the prior low.

And as the market breaks down, where do you think they are going to have their stops?

Underneath this area.

Of course, their stops will start a tick beneath that swing low.

And finally, those that are already short.

Well, here's where it really gets interesting because you will find that

there's nothing like a high volatile move to make people that have a plan change it.

So you might find traders that shorted this.

Wherever they shorted it, they might have shorted it underneath this support here.

When it broke out of the structure and they're looking

for a move just down to test the last swing low.

As they're watching the market and the market picks up the pace dramatically

towards their target area, they revise the target.

Only to come back and find out it turned exactly where they originally thought.

Right? It's greed.

But it's greed based on the way the market is moving.

Now to answer a kind of point that was made earlier

in the chat, you're probably thinking, �Yeah, okay.

I can see that.

I can see that.

I can see that.

I can see that.

I can see that.

I can see the concept.

It broke beneath the swing low.

It closed above.

But it didn't really have any kind of big stop trigger, did it?

It's not like it took a whole load of stops, it spiked beneath that area.

No, it didn't.

But I found that even one tick SFPs are highly effective.

It doesn't need to spike right through the area to do that.

If it does it, it's the icing on the cake.

But I certainly wouldn't rule out a trade like this because traders, amateurs and

pros alike, will execute even one tick beneath a low like this.

In fact...

If you have a look, I did tweet this.

I just grabbed it off Twitter while I'm speaking.

This was when the market went through that low.

This is what you see.

And it's quite hard to see in clarity, but you'll see over 500 lots executed,

a tick beneath that swing low, with 100 lots went through in one block.

That's not a retail trader sitting at home in his bedroom, with all likelihood.

I'm not saying it's a massive institution, but it's fairly decent size.

It's one of the big boys, slinging 100 lot

in the spooze, a tick beneath the swing low.

You know, a lot of the time people say to me, yeah, sure, someone sells it right

beneath the swing low like that, come on, pull the other one.

But they do.

Of course they do.

So, you know, these are the kind of things I look at.

These are the areas I look at.

I'm looking at the speed with which the way the price

is moving, and the structure of the wider market.

But there's one more thing I want to add here, and I find this the most interesting

of all, which is aligned to the volatility.

And it's that many of these...

These decisions that I've just talked about, that people make, are completely

different if the price moves down there slowly.

And I won't go through all the groups again, but if you just look at the...

If we just look at the bull side of the market briefly, we said that the guys that

are on the sidelines but are bullish would probably be scared and not want to buy

down there as they see the market collapsing very hard into the area.

I've seen that time and time again that the market makes a massive move into a level.

And because it's moving fast, traders pull their orders.

They wait and see.

You know, let's see what it does there, and then it goes absolutely parabolic,

and they're like, �Fuck, I should have bought.� But if it drifts down into that

area, people aren't as likely to pull their orders.

And especially, newer traders are unlikely to pull their orders because they mistake

the lack of momentum for lack of conviction on the part of sellers,

and they decide to get in front of it.

So they see it drifting down and think, �Oh, it's running out of steam.

This level will probably hold.� And so essentially, what you have is the same

level but a completely different decision based on the way that the market trades

into it, whether it trades into it quickly in a

sharp move or whether it trades into it slowly.

Traders a lot of the time won't buy if it tanks

into it, but they will buy if it drifts into it.

A guy in prop that I work with who made an obscene amount of money used to call this

the �drift of death.� So this is where the market

drifts into a level, and the level just doesn't hold.

You buy it, it just drifts a little bit lower, and a little bit lower,

and a little bit lower, and before you know it, you've done your ass.

So I learned fairly quickly, it's one of the few things I did learn pretty quickly

in this game, that levels are way more likely to hold if the market moves into

them aggressively, which is completely counterintuitive to what you'd actually expect.

But you can test this out for yourself.

Obviously, you've got to take that in context.

If it drifts into it in Asia, it's probably drifting

because it's the Asian session and it's low liquidity.

But if it's the Frankfurt Open or the US Open and the market drifts into a level,

it's usually less likely to hold than if it shits

straight into it or goes vertical straight into it.

Thinking about the market, obviously goes without saying that when you're in this

game, you have to roll with a game plan that covers all contingencies.

I have showed my plan numerous times to people in special webinars.

Subtitles by the Amara.org community But for those

that have never seen it, I have two types of plan.

I have a written plan, which covers literally every aspect of what I do,

from money management to risk management to my daily routine.

It's a big document.

Here, what you see on the screen is my visual plan.

This is literally a visual diagram of what I do.

I have this in my head, so I don't look at it actively on a day-to-day basis,

but it covers every contingency.

For example, you know, when a market trades into a level, how strong is the level?

And these are the things that I need to consider in terms of gauging the strength.

And depending on how strong I consider the level to be, I have different outcomes.

What am I going to do if it's a weak level?

What am I going to do if it's a very strong level?

And, you know, the plan, I'm not going to go through it now

because we haven't got time, but it tells me everything.

It tells me where to put my stop.

It tells me what to do just before I place the order.

Do I have any other open orders or open trades?

What do I have to do if I do?

What to do if I don't?

And so on and so forth.

So I try to be prepared for every single contingency that the market can throw at me.

And, you know, having a plan is one thing, but

sticking to the bleeding thing is another one.

And this is where a lot of traders come a cropper.

You have probably experienced at some point in your life the whole system hopping thing.

You know, something doesn't work for a few trades, you abandon ship and you move on entirely.

That's often a bad idea.

And you try to avoid it.

And if I can honestly tell you guys, I've only ever met one trader in my entire

career who made money day in, day out, week in,

week out, month in, month out, year in, year out.

And it wasn't me.

One guy that I've ever met.

And he was in prop.

Every other professional trader that I've ever met, he was in prop.

Every other professional I've ever met has had frequent down days, down weeks,

down months, and yes, sometimes even down quarters.

That is normal.

Anyone that is telling you you can make money

every single day or every single week is a cunt.

Sorry.

I'm sorry to use such abusive language, but it is true.

They're selling you something.

You can't come into this market and take money out of it every single day.

You might be able to do that for even two or three

months on the trot, but you will have a bad time.

And when you start trading a strategy, you don't know whether you're in the

middle of a bad point or you're in the middle of a good point.

You don't really know.

So you don't want to abandon ship.

Maybe you want to cut your size.

Maybe you want to move to demo.

If you can emotionally cope with that and you can treat it

seriously, but you don't necessarily want to system hop.

But kind of worse than abandoning a whole strategy and hopping to another one is

what I see a lot of traders do, which is just tampering

with the strategy slightly due to recent success.

So, for example, they buy a level and on this particular trade, the market went

straight through the level and they got stopped out.

And that happens three times in a row.

So then they say, you know what?

I'm not going to buy on that level anymore.

I'm going to wait for a candlestick confirmation.

So they're changing what they do slightly.

And you see a lot of different variations of that.

It probably rings true with a lot of people that they make these little

adjustments based on the handful of recent trades.

That is, you know, it's a massive.

Massive problem.

But although it doesn't sound that bad on the face of it, and actually it fits with

what you learn about being adaptive, the reason it's a huge problem is because

when you add these random variables to your whole trading strategy, it makes it

very, very difficult, if not impossible to determine what works and what doesn't.

Because you're not building up enough time doing one thing.

You're constantly hopping from one thing to another.

So when it comes to looking at a journal and working out what you think is the best

strategy, you're constantly hopping from one thing to another.

And it's very, very difficult.

And again, it's that difficulty that slows down the

learning process, and it's why people get so frustrated.

In previous webinars, I've talked about the importance of not only having a game

plan in terms of a trading plan, but also having a day plan.

I won't go over this too much now because I've gone over it many times before,

and you can check the video on YouTube that I've got out that covers this plan.

But this is something that we were given in prop.

And I show it a lot of the time because it's extremely important.

This is extremely useful.

It's worth taking a screenshot of this or emailing me later and I'll send you a copy of it.

But fill it out before you trade every day.

It's a plan that is specific to the day.

Up here in the fundamentals column, don't leave it blank.

Write the fucking figures down.

I get really sick of people saying, oh, you know, I forgot

there was UK GDP today or oh shit, it's FOMC tonight.

I never would have held that trade in the Euro dollar if I'd known.

You know, you have to stop being a turd.

These figures affect the market.

You've got to write them down, know what's coming out, when it's coming

out, what it's likely to be so you can make a good judgment decision.

Even if you're not interested in the news, surely

you want to know when the volatility picks up.

And you know, as much as I go on about this, pretty much several times a week,

somebody sends me an email, says they were stopped out and

adds on to the end of it, I forgot there was news coming out.

So, just be aware of it.

Next up, where are the key levels?

People always tell me that if they fill in a plan at the beginning of the day and

they come back at the end of the day, a lot of the

time, those levels that they originally had worked well.

In actual fact though, people get in this dreaded situation where they come in with

several levels written down like by Boon at 150.20, sell Boon at 150.

15, buy Boon if it SFPs the last major swing low to the downside.

And you get to the end of the day and you look at their plan and you go,

oh wow, everything you've done today has worked, John.

You know, really good trading day, mate.

And they're like, nah, I've done my fucking ass.

And you're like, well, hold on a minute, but everything you wrote down at the

beginning of the day has worked, so what's up?

And they're like, yeah, but I didn't do any of that.

You know, I was looking to buy the Boon at 150.20, but it was in a sideways range in

the early part of the day and then it broke out higher and I suddenly steamed in.

And they get to the end of the day, they've done fuck all in terms of what

they meant to do at the beginning of the day and they're down.

So I made it a rule in my own trading and I try to tell people to make the same rule

in their trading that you write down the key areas to do

business at the beginning of the day and stick to them.

If they don't set up, they don't set up.

I also think it's very important to put in information of what you think the market's

going to do and then later on remember to fill in what actually happened because

this tells you how well you're reading the market.

Sometimes I say to guys in my live room, I'm not trading today.

And they say, well, why?

And I say, because I don't like the way that the

market has been moving over the last couple of days.

And they might think to themselves, oh, you know,

I presume you've been trading it and done your ass.

I'm like, no, I haven't even traded.

But I don't like the way it's moving.

I don't know if I'm in a position or not.

I was groomed as a prop trader to have an

expectation for what the day is going to do.

And although it might not trade into my levels, if the market isn't doing what I

think it's doing, then I'm reading it wrong.

And if I'm reading it wrong, then something's up with that.

So you get a feel for how well the market's behaving.

You don't necessarily have to lose money to know that it's a hard market I find.

The conclusions is the most imperative bit of this entire sheet.

At the end of the day, you have to write down what have you learned from today?

If you don't learn, you won't earn.

I had no realization that I was gonna create a rhyme then.

But I like it nonetheless.

But it's true.

You know, you have to learn.

You have to learn something every single day, as a trader.

And again, it's a common theme among people I find are losing money.

They get to the end of the day, and they are not going up and You know

they moan, they just fucking moan about everything they did that didn't work but

you never see them saying, I'm going to make

sure that I don't do that again tomorrow.

And that's the hallmark of a very good trader that they

will actually look at what they did and learn from it.

Now, if you're getting attacked by zombies, what's the first thing you better do?

Find the weapons, board up the windows and get ready to kick ass.

In trading when you're starting out, you got to get organized.

Now, I don't have a huge amount to say about getting organized.

It's relatively straightforward but I have a few points to make.

Firstly, use a good broker.

Please, do not try scalping the bund with a three tick spread.

This is something else I see people doing all the time.

Scalping the bund with a three tick spread, it's a recipe for disaster.

If your broker constantly goes down, change the fucking thing.

The broker is an ally.

He's not a means to an end.

The broker is your ally.

Good execution is imperative in this game.

I saw loads of people saying their broker went down on FOMC.

I bet they're still with the same broker.

That's not the kind of thing that you want to see.

So, think about it.

And you owe it to yourself to use the best tools in this game.

And the tools that you do... use them effectively.

I know not all of you are very big on Twitter

because, you know, some people see it as noise.

I use Twitter a lot.

And everyone that I've worked with in prop has an entire screen dedicated to Twitter.

It's very good for a sentiment gauge.

It's a very, very good tool.

But like anything, it needs to be organized.

If you're using TweetDeck and all you've got is a single column,

your home column and everybody is vying for your attention.

And you follow 800 people.

How the fuck are you supposed to make any sense of that?

You've got to organize your information streams

so you see what you want when you want it, right?

So here, I've got it organized into news, into traders that I follow, into analysis,

into the brokers, into the software.

I've even got a little section if you scroll

forward to the right for friends and family, okay?

But, you know, I do that because when it's news

time, you know, you're going to see a lot of people.

You're going to see a lot of people.

You're going to see a lot of people.

You're going to see a lot of people.

You're going to see a lot of people.

You're going to see a lot of people, Mike.

There's all kinds get a lot of people.

You're going to see people who are not run -up to run-up to cut money because they've

got a boyfriend, a girlfriend, a girlfriend who has kids and everything,

okay?

You want to see what the news is.

You want to see how the market is moving.

So you need someone that's dedicated to bringing you that news.

So at the end of the day, you know, it's just another tool that you want to

organize if you're using it in your trading.

But in this game, your biggest weapon and I know this is a cringe-worthy cliche,

but your biggest weapon is you.

What about the game?

Don't turn your focus away and stay where you

are right now because What are you good at?

What are you bad at?

And this brings me on to my next slide.

Yes, they will eat the fat ones first.

So you better shape up.

If you're not working on yourself, someone else

is and they will survive and they will beat you.

There's a hundred people in this webinar and if a hundred people all followed

everything I said and I mentored all of you, it's highly likely that although

you'd all be in the same camp, only five, maybe

ten, at the most optimistic of you would make money.

That's just a simple fact because I've seen it many, many times.

When I was in prop, it was very insightful from this perspective because newer

traders, all of them, were very, very, very, very, very, very, very,

very, very, very, very, very... always moan.

They moan about everything.

They moan that they haven't got enough money to trade.

If only I had a ten grand account rather than a two grand account.

If only I had eight screens rather than my shitty laptop.

If only I had a really good broker rather than this crap spreadbet company.

If only I'd make money I'd be a ledge.

But let me tell you something.

In prop, everybody gets the same training.

They're trained to trade the market the same way.

They get the same broker.

Okay?

They get the same software.

They get the same order entry tools.

They get the same access to the same news flows,

the same commissions, and the same capital.

They even get the same risk management.

They're all on a level footing and still, only 5% to 10% of those guys make it.

Which is proof beyond anything else that it does come

down to the trader, the individual, and their psychology.

Okay?

No surprises there because I'm sure we've heard that many, many times, but it is

insightful seeing that everyone is on a level footing, getting the same education

with the same tools, and still people aren't making it whereas others are.

You as traders need to think about why you're better than the next guy.

Joe, why are you better than Robert?

Kate, why are you better than James?

You have to think like that.

I mean, look.

We're all here for a nice informative video.

We're all here for a nice informative little webinar, and we're all hellos and

how we use, you know, oh, I'm great thanks before

it started, but this isn't a place to make friends.

These aren't your friends.

These are your competition.

I'm not trying to hype it up.

The bottom line is, is that the next guy or the next girl is your competition,

right?

And if you're not working on yourself, somebody else is.

Somebody else will be putting in the work, putting in the hours, and in this game,

that means that they will be taking your money off you.

Okay?

I'm not going to go on about a journal tonight

because I've gone on about it many, many times before.

Suffice to say, it's your strongest ally.

An hour with your journal will help you more than five hours with your charts.

I will absolutely guarantee you of that.

But I'll tell you something that you can use if you're a newer trader.

Take a screenshot of this.

You can knock one up in Excel pretty quickly.

Maybe you want to adapt to it.

Maybe you want to adapt it to your own trading.

But this is something I've had for years, and it's a tool that you use to learn from

your errors because learning from your errors

is really the only way to achieve success.

So you have down here a number of sins, for want of a better word.

Sins relative to every individual trader.

But typical ones, you might have exited too soon.

You might have exited too late.

You might have entered too soon, entered too late.

You might have taken a trade that's not in your plan.

The list is fucking endless, right?

But make a list of them.

And place a check mark in the box every time you commit the error.

So if you took a trade that's not in your trading plan, mark it out.

The next day occurs.

You get to the end of the day.

Shit, I did a trade that wasn't in my trading plan.

Tick it again.

And what you want to look at is over time which error is outpacing

the rest and kill that error as quick as humanly possible.

So that's the first thing.

If you reach 10 errors in any of these categories, you should stop trading.

In fact, you should probably fucking quit the entire

game because you shouldn't get anywhere near 10.

You know, again, 10 would be like banging your head against a brick wall.

But listen, I have one point to add to this.

Recognizing a problem is only half of the story.

You've got to do something about it.

Okay?

I get this all the time.

From students.

Honestly, I wish to God I had a fucking penny for every

time I've heard a trader tell me what their weakness is.

They all know what their weaknesses are.

But I wish I had two pennies for every time they did fuck all about it.

I wouldn't need to trade the bund anymore.

There's nothing I see more than people saying, I knew what

I did wrong and then going on to make the mistake 10 times.

What are you doing about it?

I was having this argument with my girlfriend the other day actually because

she trades bund and she's actually quite successful at it.

But the bund was quite dry and she'd moved into gold.

And she took a trade in gold off a decent level and she got stopped out.

And literally within about five minutes of her getting stopped out, right at the

point where she got stopped out, the market went

sideways and she steamed in again and she lost money.

And it carried on moving down.

Stagnated a little bit.

Went sideways.

And she steamed in for the third time and lost money.

And at the end of the day, she said to me, you know what, I've realized what I've done.

I've over-traded that today.

The first level didn't work and I shouldn't have cracked it a further two times.

Fantastic.

That's someone that's recognized the weakness.

What did she do the next day?

The same fucking thing.

Exactly the same thing.

Traded the level three, four times.

Ended up with a big down day.

Okay.

Um.

I was saying to her, you know, if you buy it and you put a stop in and

the market goes to your stop, you get stopped out and then it stabilizes,

what on earth makes you want to get in again?

And she said, well, because it's gone to my stop.

It's knocked me out.

But now it's stopping.

It's slowing down.

It looks like it's going to turn.

So I thought, you know what, I've just puked the low.

I'm going to try and get in again.

But I said to her, but the fact it's stagnating around at your stop,

doesn't that show you that you're wrong on the trade idea?

Because if you're right on the trade idea, you're going to get in again.

It shouldn't have fucking gone to your stop in the first place.

So I mean, I know, again, some people do like to trade like that.

I'm not here to say that that is the wrong thing to do, you know, to get stopped out

and then if it looks like you're getting a reversal signal to get back in.

I'm here to say that it's the wrong thing to do if your results tell you it is and

you keep doing it again and again and again.

When you're in the midst of zombie infestation, you'll look after your ammo.

It's probably going to be the most important thing you've got.

After your legs, which allow you to run away.

In trading, that's your capital, right?

Now let's talk for a second about an edge.

Very, very basic stuff.

Let's just briefly revisit.

Remember, this is a webinar for newbies.

So let's just quickly look at what an edge is comprised of.

It's comprised of three elements.

Your strike rate, which is the percentage of the time you achieve a winning trade.

You win 7 out of 10 trades, you've got a 70% strike rate.

Right?

Nice and simple.

It's also comprised of your payoff, which is your return on risk.

How much you risk versus how much you're actually rewarded, taken as an average over time.

And finally, it's comprised of your trade frequency, the amount of time that you trade.

You might have someone that has a slightly lower expectancy but trades 15 times a day

as opposed to someone that has a slightly

higher expectancy but only trades once a day.

The more frequent trader, all things considered, will probably

come out ahead just because they are getting more setups.

That's not an advert to overtrade, that's just a mathematical fact.

But ideally, with all of these elements, the higher the better.

And you want to be aware that if any of these elements are skewed to the downside,

it can create psychological issues.

Most of the problems that traders get psychologically are down to the simple

fact that one of these three things is skewed.

Again, briefly in turn, what might happen if your strike rate is skewed?

If your strike rate is skewed to the downside,

you can get disheartened very, very easily.

It doesn't mean you'll have a negative expectancy but if you're batting an

average of say 40% of the time you're right, that can be hard for a newer trader

that becomes fixated on being right and winning and

doesn't like losing 60% of the time, for example.

But it also means that if you have a lower strike rate,

you're more likely to get multiple loses in a row.

This again can hit you very hard from a psychological basis.

So it's a problem when your strike rate is skewed lower.

Now if your payoff is skewed lower, that can also be a big problem.

Very popular again among newer traders is to have a

90% strike rate and you might be thinking, you what?

Nobody has a 90% strike rate.

I know traders that have got a 95% strike rate.

Unfortunately, they make £2 when they win versus losing £100 when they lose.

Okay?

So if your strike rate is skewed very, very low, then that can be a problem as

well from a psychological perspective because although you're winning the

majority of the time, when you get hit, you get

hit hard and it undoes a number of loses in a row.

Finally, the trade frequency.

Traders inherently want to trade and the hardest

element to learn is the patience to stand aside.

So it is easier if you have a higher frequency of trades.

I'm not encouraging over trading.

But let's face it.

All things aside, if you have a profitable expectancy on a pattern, you want to see

20 examples of that pattern a day rather than one, obviously.

It's hard if this is skewed to the downside.

If it's skewed to the downside, you have to be way more patient than the

average trader and it also means that if you experience, for example, a couple of

losing trades and you've got a low trade frequency, it will take you longer to get

back on top which again plays with your head.

So you might want to start out, especially if you're not making money,

by looking at these three elements and working out if you're not making money or

you're not doing as good as you'd like to be, which camp does it lie in?

Which one of these?

Because it will be one of them which is posing a problem for you.

And that might be an area to begin thinking about.

I want to talk very quickly about the role of luck in this game.

I want to talk very quickly about the role of luck in this game.

People often say that this game is all skill.

Nothing could be further from the truth.

There is a lot of luck in trading and I'll tell you one

way that there's a lot of luck is if your edge is slim.

If your edge is slim, luck can actually play quite a significant part in your

success and this might be frightening to some newer traders.

But take, for example, a coin flip, right?

So you flip a coin.

You're expecting what?

Heads to come up 50% of the time.

Especially, you know, if you flip a coin, you're expecting what?

You know, again, over the long run.

But if you keep flipping that coin and you put it in an infinite amount of flips,

you might get 20 heads in a row, 20 tails in a row.

There was a famous example of this in a Monte Carlo casino in 1913 when a roulette

wheel landed on black 26 times in a row, right?

Can you imagine how many people did their

fucking ass when that black came up 26 times?

I reckon after time like six or seven, people

will be like, �Shit, it's got to be red.

It's got to be red.

I'm balls deep red.� And there you go.

It doesn't happen very often but it can happen.

And you know, obviously, winners and losers kind of rise in any order.

If you have a look at this equity curve that's on the screen, this is an old

equity curve generator that I found on the Internet.

It's not around anymore as far as I know.

But it shows you something quite interesting.

Okay.

So if you have a look here, you will see that there's two things that I filled into

this which is the win probability which is 55%.

So basically, 55% of the time, you get a winning

trade and your payoff is one times your risk.

So for every pound you risk, you get one pound back.

Now presuming that you've covered spread, so it's literally black and white.

You risk a pound.

You get a pound.

If you're winning 55% of the time.

Mathematically, you've got to make money, right, over the long run.

But have a look at this over a fixed number of trades.

This is a hundred different equity curves.

And over a hundred different equity curves, most of them are above the profit

line, right, as you would expect because that is a positive expectancy.

It's a slim one but it's a positive expectancy.

But have a look at these.

This is by pure chance alone.

That these guys are under water with their curve.

And look at this guy.

This guy is fucking laughing.

You know, he's absolutely cleaned up even though he hasn't got that much of an edge.

And this is where, you know, again, particularly in the short term,

luck plays quite a key part in trading.

But again, it's something that a lot of people forget.

I always scare people when I tell them this but I

got profitable in 2007 and before I got profitable.

I put in three separate periods of making money for three months plus.

There was a period in 2005 where I made money virtually

every single day hand over fist for three months.

I thought I cracked it.

I was like, I fucking killed it.

You know, little did I know, I was two years away from consistent profitability

because obviously something that I was doing in the

short term was working and then it turned to shit.

And, you know, again... I don't know.

I don't know.

I don't know.

It's worth bearing that in mind.

So when it comes to trading, there is a totally

random distribution between wins and losses.

So you might have a trading strategy that wins seven out of every ten trades but you

don't know what sequence the wins and loses are going to come in.

If you take a screenshot of this, I've tweeted it before, it shows you the

probability of seeing a certain number of consecutive losing trades within a 50 -trade period.

It shows you the probability of seeing a certain

number of consecutive losing trades within 50 trades.

Okay, so i.e., you work down the left-hand side and you have a look at what your

strike rate is and it will tell you the mathematical

probability of seeing this number of losers within 50 trades.

So as an example, if you have a 65% strike rate, which is not bad, not bad,

it's actually pretty good.

If you have a 65% strike rate, you have an over 50% chance of four losers in a row.

In fact, you've got over a one in five chance of five losers in a row.

Now, again, a lot of people understand these things, but there's a difference

between understanding something and making peace with it.

You have to know that there is a chance that you can

get multiple losers in a row and be prepared for it.

What do you do when you get those multiple losers in a row?

Have you got a plan for that?

Are you going to cut your size?

Are you going to stand aside from the market or are

you going to trust in your edge and carry on trading?

It's not for me, in this webinar, to tell you what to do, but have a plan

for it so you don't shit yourself and start falling victim to things like this.

Things like recency bias because you'll just be forever chasing your own tail.

So you can see that sometimes you can get bitten and in the world of zombies,

if you get bitten, well, what happens next? You're dead.

So finally, keeping your head in this game, first off, to

literally prevent from going mental, take regular breaks.

Okay?

I am well aware what stress can do because I've got a full head of grey hair and

blood pressure of 140 over 90 and I only just turned 35.

I sit here for 12 hours a day in front of this market.

It drives me batty sometimes.

But get some exercise in the middle of the trading day.

It's amazing what a 30-minute run in the middle of

the day can do for you to release stress and energy.

And you see most of the guys in prop will get out, get some exercise, recharge,

regenerate, whatever it takes.

But you want to take breaks from the market, regular breaks.

And that is also an important point to bear in mind when you're getting your ass

kicked as well because there will be times, I've experienced them recently,

where you get fucked.

You know, everything you do turns to shit.

And there's nothing you can do about it.

You can only look back and say, is what I'm doing the correct thing?

Am I sticking to my plan?

And you've got to roll with it.

I like to take breaks when I'm getting my ass kicked.

I like to take a few days off.

And I think it's very, very important for people to get in that mindset to try and

prevent the onslaught of these big mistakes that people make, like upping

their risk, getting too attached to results in the short

term, and not remembering that this is a long-term game.

And analyze your performance.

If you get one thing from this webinar, if you're

a new trader, just at the end of every single day.

Make a commitment to do something better tomorrow.

And write it down.

Honestly, it could be something as simple as, I

got up at 7.30 and I missed the trade in the Euro.

Tomorrow, I'll get up at 7.

It could be something as simple as that.

But whatever you do, pick on something that you did

in the day and make a commitment to do it better.

That sort of seems like it slightly contradicts what I

said earlier about not getting involved in recency bias.

And I don't mean, you know, make a massive change to your plan.

But every day, there is usually something that you could have done better.

And at the very minimum, write it down and work

out, is there a way that you can improve on that?

And especially if you see that same thing recurring, if you see yourself writing the

same thing down day after day, then do something about it.

Going back to what I said about my girlfriend, you know, after telling me

what her weakness is on day one, she repeated it on day two.

Guess what happened on day three?

I didn't let her trade.

She hasn't done it since.

So that's what I wanted to cover.

I guess in parts, it's been a depressing webinar because there's a lot of things

that are somewhat negative for newer traders.

But at the end of the day, you have to realize that this is an incredibly,

incredibly tough game.

So once again, thank you very much for coming along to the webinar.

It's something that I've been wanting to do for a while.

I'm going to try and give a little bit more reality to this game because when I

started out, I wish someone would have done that for me.

I wish somebody would have told me how fucking hard it was and how I was likely

to do my ass rather than promising me the world.

There's a lot of stress.

There's a lot of pressure.

And while you can make a lot of money, it takes its pound of flesh, this market.

There is always a cost.

And the cost of getting profitable in this game is not your trading balance.

It's not your fucking how much you spent on a mentor.

Or how much you spent on a course.

The cost of this game is not always financial.

There is usually another cost.

It might be a cost in time.

It might be a cost in health.

It might be a cost in relationships.

I'm not over-dramatizing it.

I know a lot of people that have suffered those elements.

Something to think about maybe.

Anyway, legends, thank you for coming.

Thanks for coming, Anton.

It's always a pleasure to see you.

I hope you don't get blown up on board your plane.

Or your space rocket.

Although it's not looking good.

And I will hopefully see you all next week.