Give Me 25 Minutes, I’ll Give You 10,000 hours of Trading Knowledge

0:00 Today, I'm going to show you the top 10 most important lessons that I've learned from over 10,000 hours of trading. Say you're learning trading right now. Everything's working great. You're becoming profitable within the first few months, thinking with total clarity, successfully scaling accounts, and taking payouts. you might as well click off this video because the next 25 minutes or so of this video is designed for people who are frustrated, who are trying everything to learn trading, but are still just becoming more and more confused, hoping that something is going to click and not really knowing if the hard work is progress or you're just convincing yourself that eventually it will pay off. I've been trading for over 8 years, but I can tell you I know this exact feeling because I was in that situation when I started and it almost led me to quit. And if you told me one year into my learning process of trading that I'd be having 10,000 plus single day profits months with 30 $50,000 in

0:47 profit taking these trades in front of a live team. I wouldn't have been able to even fathom that. Because here's the truth. Being confused learning trading is part of the learning progress. 90% of traders end up failing. Which proves this isn't about raw intelligence. It's about whether or not you've learned to think and approach trading like a trader. And what I've learned is to win the game of trading, you have to completely rewire your brain logic out of the mindset of the 90% that lose and into the 10% of people that succeed. So today in this video, I'm going to show you the most important concepts that I've learned from over 10,000 hours of trading. And I've set them up into 10 pillars so by the time you're at the end of the video, hopefully you can shave off a couple thousand hours of work, if not more. So, moving into tip number one, and this is the most important thing that I like to show to anyone

1:33 who's learning trading or trying to master it, and that is to keep it stupid simple in the beginning. Most people's natural thought when they first get into trading is to fire up an account, put money in, try to learn a strategy, and then just basically play around and see if they can start making money. This immediately frames your mind to think about trading completely incorrectly. And that's why most people spin tires for a long time or end up accidentally losing a ton of money when they don't have to make those mistakes in the beginning if they're looking at trading like a professional. And the single most important thing regarding doing a skill that is difficult is to make it repeatable. Everybody can have a good result once in a while, but to be able to do it on a routine basis, especially when it counts, relies on you to keep it super simple and to try to decrease the

2:18 amount of variables that are going to throw you off that path. And in order to keep trading stupid simple, we have to look at trading not looking at money, not looking at complicated multi-step processes, but what we're actually trying to do at the core of trading, and that falls into three simple steps. All we're trying to do is find market opportunities that set up conditions that seem repeatable so that we can follow a model and then hopefully over time end up with more profit than loss. Okay? And we do that by number one establishing rules. Number two, testing those rules and then number three evaluating the result. This should be done before any money is entered into the market. And it's going to explain to you how you need to look at trading to avoid a bunch of the other mistakes. And you're going to see how it's going to tie into what I'm going to share with you further into this video. Okay? So

3:04 let's take this example here. First, we have our rule set. We'll take a very simple concept in trading. We buy at a moving average. We put our stop-loss or our risk underneath the entry candle. And number three, we target three R. And part of keeping this super simple is by looking at trading in terms of risk factors. Throw money out of the window for a second. What we want to focus on are risk factors. So if we want to enter into the market here, if the market moves against us, that's negative -1 unit of risk. And if the market moves in our direction towards our profit target, that's positive three units of risk. Once we have the rules, the next thing that we have to do is test those rules. So say for example, we do 10 trades. On three of these trades, price comes down to our moving average. We take an entry. We target three times the R that we're

3:49 risking. And say that results in three wins out of 10 trades. So a 30% win rate. of the seven trades that didn't work out following the same exact rule, that would result in -7R. So 70% of the trades that we're taking are losses, 30% are wins, which gives us out of 10 total trades, three trades* 3R, which is 9 total R minus the 7R is going to leave us with a net total of positive2 risk factors at a 30% win rate. And the third step is to measure results. So this table shows you where you need to sit statistically in order to maintain an edge in trading. All we're trying to do is end up on the green side of this chart and avoid being on the red side. So considering we have a 1:3 riskreward with this concept and we're winning 30%

4:36 of the trades, you can see this puts us right on the line of being profitable. However, imagine if we started adding all of these discretionary calls where we're risking different amounts of money depending on how confident we are on a trade and having a million different rules that are all relying on the perfect star alignment. We'll always have different inputs, never have any consistency, and never be able to measure this process to see if we're profitable. And this ties into a concept called Okam's razor, which basically states that the simplest solution is usually the right solution. When when you're starting off, in order to be repeatable, the more noise that you add between your steps, the less repeatable you're going to be and the less likely you're going to achieve profitability. You want to build a solid core first, then add more layers of refinement as you prove that the structure you're

5:21 following is repeatable. Which brings me to point number two, which is to focus on process and completely forget about money in the beginning. As I've just showed you, all we want to do is be obsessed with process and learn how our actions result from a data perspective over a large enough amount of trades. Okay? When you start adding real dollar amounts into this equation, what typically happens if you don't have the fortitude and the conditioning to be only motivated around the success of your actual trading, you'll start changing different things trying to chase after a dollar amount or prevent yourself from losing a certain dollar amount. So, you'll start changing your behaviors. What you want to do is really, really lock in those behaviors before you start adding money to this equation at all. That's going to teach you how to be a proper trader, not throwing some money into an account and then trying to scale it up. Okay? And I

6:08 promise you, if you build the repetition only looking in terms of R, you're going to be so conditioned to only focus on the process that when you do add money into the system, you're going to look at the money in terms of units of risk rather than emotional connection of you trying to chase making more money. That's a golden concept in trading. And trust me, I wish I had that information sooner. Which brings me to lesson number three. This is to kill what's called the finish line profitability fantasy. Okay, it's very easy to sort of dream of this final state where someday I'll be profitable and once I reach that state, I'll never have issues in trading and I'll never be stressed. Sad news flash, that state doesn't exist. There's no perfect arrival for the entirety of your trading career. The best traders in the world are all going to have periods of draw down where they feel like they have no idea what they're doing whatsoever

6:55 where they have intrusive thoughts about is my strategy broken? Do I really know what I'm doing? These feelings are natural and they're never going to escape your brain fully. What's important is to have conviction based off of the own tangible evidence that you've given to yourself by doing so much preparation work and looking at objective data. The more you start changing things and making it random, the easier it is for you to have doubts in your system to start getting superstitious and falling into those types of behavioral traps which can mess you up. Okay? Because the reality is most people are going to start seeing some success in their trading, grow their accounts up, and then inevitably you're going to hit a period where the market conditions aren't right or maybe you're messing up a bit. Okay? The faster that you can understand that this is completely normal and something that

7:41 you should expect throughout the rest of your career, the more you can learn to adapt and push through this and set up a game plan to be able to overcome this. Whereas most people are going to let this completely destroy them and leave them completely confused starting from square one or even moving backwards thinking that they need to acquire a bunch of more information or that something mysterious was off and they just need to keep trying or try something slightly different. This is why it's so important to test to have your own information and keep things really, really simple so that you know you can follow those steps repeatedly. And this ties into lesson number four, which is preserve your capital. Okay, the best traders in the world are not defined by how much they can make or profit. It's about how well they can lose. Okay, there's a really good trading book called The Best Loser Wins.

8:26 But basically, it's explaining this ideology that inevitably you're going to have losing streaks or periods where you're losing a bunch of trades. Most traders are going to implode. The trader that is able to handle this and has systems in place expecting this is the one that's prepared, the one that understands and trusts their own process and is going to be able to overcome this and not let it ruin them. Okay? So during that growth period once you inevitably run into this trap, you need to be able to set up mechanisms first by designing your strategy so that you're comfortable with the amount that you're risking. But two, having safeguards to not blow your entire account when the market conditions sometimes are simply not going to allow you to play out your edge and it's not going to work for your strategy. Okay, so the number one thing that I do with my trading strategy is I have a hard negative -3R stop on the

9:12 day. So, if I go down 3R in any given session, I am shutting my computer down. I'm walking away for the day. I'm logging my information. I'm digesting what happened. And by no means am I making an exception to take an additional trade. One of the biggest things that I've seen in catastrophe, even with some of the best traders that I know, is they say, "I went on tilt today. I took too many trades. I shouldn't have done that. I can't believe that I did that." This is something that you need to follow religiously. Sometimes the market's not going to align with your strategy. That's totally fine. But if you allow those periods to draw you down and then you start revenge trading because you don't want to lose on the day, you can erode a lot of that statistical success that you factored in by making those psychological mistakes. Okay, in order to do this, I think one of the most important concepts is to learn something called metacognition. Now, basically

9:58 what that means is most people have an emotion and then react to something based off of that emotion. What metacognition is is basically your ability as a person to detach from yourself and look at your own decision-making in real time objectively sort of like from a third person perspective. If someone says something mean to me and then I start getting emotional and I want to say something. The metacognition in that would be me looking and saying that person said this for whatever reason. I'm feeling this way for whatever reason. Now I have to think how I'm going to react to the situation. If you can take a few more seconds to think in that framework and watch how you respond rather than responding. Okay, first of all, I think this helps in life. But second of all, in the realm of trading, this is something that I've seen commonly amongst people who are able to actually

10:45 succeed versus ones who end up saying, "Oh, I did it again. I gambled. I didn't follow my strategy." They're acting off of impulses. You need to master metacognition and understand. You need to observe your own feelings during your trading. You're going to have periods where you just lose a trade and then it goes full profit. and you're like, "Oh, like it gets me so angry." Understand why you're feeling that and then think about how does that affect my data if I were to act off of this? And then say, I understand why I'm feeling this way, and because of that, I am not going to do anything further. I'm simply going to execute my strategy. Faster you can learn metacognition, the faster you're going to be able to control yourself and not allow emotions to drag you down. Which brings me to lesson number five, which is not to risk real capital until you've gone through this three-stage process. Okay? Okay. And hopefully this will prevent you from wasting a lot of unnecessary capital. Like I said, what I

11:32 see most people do is they find a trading strategy and then they put money into the market and they say, "All right, I'm going to play around with this and see if I can make some money." Then if you're a gambler, you lose money. You want to add more, do it again, add more, do it again. Or if you're just a normal person who's emotional about not understanding that losses are predetermined and calculated requirements to be able to let your edge play out, you're going to get an emotional adversion against losing if you don't start in this framework. and then you're going to be scared to put any money to work in the market. This is what you need to do instead. And by the way, this is exactly what I show to all of the most profitable traders that I've taught who are now crushing it. I haven't seen one of them not go through this process. Okay? And this process can teach you how to be a good trader exponentially faster. And that is starting with replay, then moving to paper trading, then moving to a live account. Only if these two stages are

12:19 actually profitable. A lot of people don't know this, but on Trading View, say I have a strategy that I want to test out. I can go into this button right here, click on bar replay, bring it to any period on the chart that I want, and then if I hold down shift, click this play button, it's going to play candles forward in real time. So if I play this forward, say my system told me to take a trade here, I can now go through and act as if I took a trade on this exact part on the chart. And you can see I can look that I made three R off of this setup. Look at it in real time. And instead of wasting 2 hours, it takes me about 30 seconds to get a result to see if my analysis was correct. So that replay feature is the number one thing that you should be doing with whatever strategy that you're testing and just calculating in simple terms of R, is this even a profitable approach? Right? You don't want to spend

13:05 weeks trying a strategy either in real life or trading it in real time with paper until you have conviction to believe that this could actually work. Once you have calculated that and you see that over 50 100 trades that you can do in 2 three hours of work, this strategy is profitable over a large period of data. Now you can move to the next stage which is paper trading. Okay? So that's where you can basically trade the live market but do it in a simulated environment to see how much you would theoretically make. Right? So now you're responding to the real emotions of making the decisions in real time. But again, you don't have to put any money on the line to see how you would perform based off of your repeatable system, right? So, if I click on this trading tab on trading view, you just click on paper trading. Hit connect. There's going to be a trading tab down here that I can click and open. You can see I can

13:51 click into this, click create account. Say call it test number one. You want to put $5,000 into it. Hit create. Now, you're going to have an account with $5,000. You can minimize that tab. And if you click on trade here, it's going to open up a trading terminal on the side of your Trading View software, which by the way, if you don't have Trading View, I'll put a link in the description. This replay feature requires a premium subscription. I think it's $9 a month. If you buy it on Black Friday, you can get it for 70% off. I'll put the link in the description for you. But basically, this is where I can set up a position, click buy, and now you'll be able to see how you're actually going to perform in real time to see what's really realistic for you to execute. And then only then do you move to the third stage, which is trading with live capital. Assuming that the paper trading is pretty much the same as your replay, minus the fees, minus maybe missing some

14:38 entries, but still profitable. The goal is to expect diminishing returns from the replay to paper to live, but for it to still be profitable by the time you get to a live account. An important note, watch how your outcomes shift at each stage because this is going to show you how your emotional behaviors once it starts mattering a little bit more are shifting your actions from when there's almost zero stakes on the line during your replay period. Okay, this replay period is going to be perfect conditions. So, if you all of a sudden are acting way different by the time you get to a live account, you can very easily see if you're tracking things properly and looking at your own data where you're changing your system when you go live. And now that's your single point of failure to address versus being confused, losing money, and having no angle of approach to fix it. And also,

15:23 this prevents you from going to the market and wasting a ton of money. Which brings me to lesson number six, and that is when you go live, risk less money at first than you think. It's exciting when you see your strategy working and you're like, I'm going to go in with $200, $300 risk per trade because if I can do that, I can make $3,000, $4,000 this month. What will happen is that if you're not used to trading the live markets, when you do start to lose real dollar amounts, anything can throw you off and you'll start getting emotional and then you'll start changing your behaviors, taking less trades, cutting trades sooner, which don't allow your winners to run, which can ultimately throw a wrench in your entire development. You can also blow a ton of money and now you're fearful and you're also thinking, I have all of this money to make back once I am profitable. You're digging yourself deeper and deeper down into

16:09 that hole that makes it harder and harder to recover. The better play is to risk way less money than you think when you're going live and just be patient to learn how you respond when real money is on the line. This will allow you to catch mistakes early, correct them. But trading with really small amounts, and I'll show you in a little bit here how to sort of set that size up initially, is going to allow you to make corrections, learn how to improve early without wasting unnecessary amounts of money. And also getting in your own head and changing things can ultimately hurt your progress over time. Lesson number seven, don't chase daily profit goals. And here's the reason for this. Most smart people, when they have something they're trying to figure out, are going to set up a way to break up a big goal into little manageable daily goals to get to their end result, which is smart.

16:55 But they're missing one piece that pertains to trading that doesn't pertain to other goals necessarily. Okay, so this would be an example of some pretty common logic. Say someone trades for 5 days of the week. They plan to do that for four weeks of the month, which gives them 20 total trading days. If their goal is to make $5,000 in a month trading, that would mean that they would have to make $250 per day to be able to achieve that goal. But this logic is flawed because say, for example, these are our 20 trading days. Say the gray days are profit days and the red days are loss days. If our target is to make $250 each day, the first two days, maybe we hit that. So, we get 250, $250, that's $500. Then on the third day, say we lose $100. That means on the fourth day, in order to keep on track with our

17:41 goal, now not only do we need to make $250 that current day, but we need to make $250 from the previous day, as well as recoup the $100 that was lost from the losing day. And then say from there, we have four days in a row where we're losing. If you're focused on a daily profit goal, what's likely to happen is you're going to say, "I'm so far away from my goal now. I'm just going to try doing this. Maybe I can make some profit, or I'm going to go all in on this one trade because this is a really good setup and I want to recover and get back on track." Focusing on those daily goals is going to drive you into the ground. And you need to focus on lesson number eight, which is reverse engineering your profit goals from reality. Okay? And you do this by mastering something called proxy goals. So your only focus as a trader should be

18:26 two things. Following your system as closely as possible and then secondly figuring out in terms of units of R how much R is being created over a duration of time. So say over our month we know that trading in our process generates typically with what we're able to do 15 positive units of risk. And what that's going to do is allow us to position how much we need to aim towards risking per trade to hit our monthly goal, which will also allow us to hit our daily goal by default. Okay, so say our goal is 5K on a month. And we know our strategy makes us positive 15R over a single month. All we want to do is take our 15 and divide it by the $5,000. And that is going to give us our goal risk per trade. That doesn't mean we're going to

19:12 immediately go for it and just try to risk that amount per trade. But that's going to tee us up for a goal to work towards gradually to be able to eventually scale up to that point and then all you're doing is focusing on system and then by default you're getting close to if not surpassing your actual monthly objectives while never focusing on money. Okay? And I can't explain to you how important this mental framework is. This industry is constantly telling you to focus on money and flashing cars and flashing success and flashing profit. That is all a trap that keeps you down from never achieving that and idolizing that. All it is is people's ability to do this. And I promise you, all the successful traders are looking at their trading in terms of this one way or the other. Okay? So once you have that target goal risk amount per trade, like I said, you're not just immediately slapping that on and trading that. What you're doing is you want to

19:59 use proper scaling, which brings me into lesson number nine, which is using something called percentage-based scaling. And this basically means say you start with an $1,000 account and you want to risk 5% of your account per trade. So you're risking $50 per trade. And say you were to make 3R on that trade. So now you've made $150 profit on top of that,000. Now you have $1,150. Now you're taking 10% of that now $150, which now means that your new risk per trade has gone from 50 to 57.5. And then say you do it again where you make another $150. Now you have a total profit amount of 1322.5. And if you take 5% of that, now your per trade risk has gone to $66 and started off at 50. Okay? Gradually, you're increasing your account. Starting with a conservative

20:46 amount. So that way when you're doing well, you're scaling up and ramping into the momentum. But when you're not doing so well and your balance is dropping, you're systematically risking less and less per trade. Sounds like an easy concept, but sticking with this in the beginning is absolutely critical. Okay. If I was starting with a $1,000 account, I would probably start with no more than $25 per trade risk, which is, you know, 2.5% of the account. It's right in that sweet spot. So once again, you're growing the account, you run into draw down, you start systematically risking less, and as you grow the account, you're systematically using more and more of the account while never really risking proportionately larger amounts on the account. Okay. Now, the second portion of this is figuring out how much to start with and how to do this if you're trading on something, for example, like a prop firm. Okay. A prop firm is basically giving you an amount

21:31 of capital to use. You have to follow a series of rules. Say you can't lose more than $2,000 on the account. You can't lose more than $1,000 in a single session. They're giving you $50,000 to trade with and your goal is to make $5,000 in profit. Okay. In this case, what you want to do is calculate your per trade risk off of making sure that you don't violate any daily or total account rules for the draw down on the entire account. But secondly, you want to look at something called losses in succession. Now, this is another reason why having some data behind you before you start any of this is going to be important because this is going to show you based off of your strategy how many trades you are statistically likely to have backto back that are losses. So, if we look at these 30 trades for example here, you can see we went 1 2 three trades as our maximum amount of losses

22:18 in a row over a pretty significant amount of data. So, say if we can't lose more than $1,000 in a day with our prop firm, now we know we can risk $300 per trade, if you want to keep it conservative, $200. And even if you exceed by a small amount that calculated losses in a row, you're still going to be within the rules of the prop firm, but you're scaling pretty much as high as you can to be able to fit the constraints of that account and be less likely to blow up and waste money on the evaluations and be able to size accordingly without using that percentage scale considering they're giving you an account balance to start. Which brings me to lesson number 10, and that is your surroundings. While you're going through this learning process, what I found is it's important to just basically not tell anybody what you're doing. Okay? Because all of the ideology that I've just explained to you, natural

23:03 people are going to give you the absolute opposite advice of what you should be doing to succeed in trading. So, you're better off just keeping it to yourself. So, you can fortify that way of thinking that I promise you is less common than you think. Once you understand it, it seems obvious, but then you start watching how other people think and you're like, "That doesn't make any sense." Sorry if I unpacked that for you and that's going to be a struggle you face for the rest of your life in regular life, but you wanted to be profitable at trading. So, the second thing is having accountability. Okay, doing this by yourself is really difficult. When I first started off in trading, I had partners that would trade with me and we would work on things together. Someone that was in a similar situation as me, learning the same things. But keep in mind, the wrong partner can steer you completely in the opposite direction as well. Okay? There's a lot of communities online where people are doing completely random things, treating trading like gambling.

23:50 That just as easily can drag you down. Okay? Having community where everyone's working on the same exact thing is the exact reason why I built a trading community called Inevitra. Number one, everyone's been through the base layer education that takes you from square one, teaches you pretty much everything that I've learned as well as all of my strategies, and then an environment for people to work on it together, watch us trade it live, ask questions, and develop and be around like-minded people, focusing on those system-based goals. Right? This is one of our students that recently did this. You can see he's even saying, "Pick one specific model or system and then refine your own back testing to where you can confidently start trading the live market." And you can see recently this is the month that Brandon just posted. And you can see most of my students are talking in terms of risk units. 8.4R for Haley, 2R, 5.3R, 7R. Okay. Once again,

24:38 focusing on systembased goals, going through a process that works. Then being able to fund accounts, take payouts, grow. That's what it's all about. That's how you actually master trading and what I've learned from doing this for over 9 years. Okay, here's another video if you want to learn more about how I trade. Make sure you hit the like button if you're still here and you appreciated this video. Subscribe if you want to know when I drop other content. You can check out our private trading team here if you want to trade alongside us. Also, every morning we do pre-market analysis. You can check that out in the Discord which is in our description. But until next time, guys, I will see you all in the next video.