All language subtitles for What_Everyone_Should_Know_About_Trading_Financial_Markets_2.video

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.