[Music] you believing that trading psychology is what's holding you back from being a profitable Trader is actually your downfall and in this video I'm going to explain exactly how so we as Traders we are wired to believe that we're not profitable because we have some sort of problem we allow our emotions to come into trading trading is 90% psychology and that is true to a certain extent however there are certain stages that we as Traders must cross before we Face the training psychology road and in this video I kind of want to dive into that
exactly because when I started out trading uh I would get into that trap right oh man uh I trade well for one week and then I'd give it all back because my trading psychology is all messed up or I don't have a good understanding about my emotions and once again it does play a role but there is a point that that needs to play a role and there's a point where you need to focus on it so let me explain this is where most Traders are right right let's just go here most Traders are at
a place where they want to basically be profitable right every Trader wants to get to this point however the case is be it from whatever strategy they're trading be it whatever Focus point they have in the market they want to be profitable now the problem is the moment any Trader goes and starts trading and makes a little bit money and then they start giving that money back or they start going into draw down we immediately go it's because of our emotions now the the problem here is we can't come to this road of emotions until
we have developed an edge once again guys this emotion component is something we can jump to as Traders until we have developed an edge now what do I mean by developing an edge this is a very big word thrown around all the time right so Edge and emot ions combined like conquering both is what makes a successful Trader right let's put the dollar sign that's what will make a successful Trader but this is what needs to be conquered first and then after this is conquered gu after you have an edge after it is proven after
it is tested then we can only conquer this most Traders try to conquer this which is the mo motion part without having an edge and every time they're unprofitable or their trading performance goes down they immediately label it to that so now let's go into how do we build this so in order to have an edge right there's a few things that you must do as a Trader number one you need to understand what or what your approach is to the overall market so for example I look at order flow right I focus on price
action right my whole idea of trading right uh what my trading structure and idea is based off is based off identifying the difference or the imbalance between buyers and sellers in simple terms I believe that on every trade or certain trading days there is an imbalance between buyers and sellers and my job becomes to identify who is in control that is where I tend to look for an edge that's where I tend to look for some sort of opportunity that I can capitalize off with that idea of trading the markets I then build setups which
I call playbooks and in these setups or playbooks I like to have criterias so for example I may have something called an opening range breakout right let's say that is a part of my Playbook or that is part of my setup this Playbook is setup follows this structure that I believe in the market this this kind of idea that I have that the market is an auction house that there is or going to be imbalances between buyers and sellers that's why we see price fluctuate higher and lower and with that I will create once again
these setups one setup being opening range breakout another setup being let's just say the morning flush and once again names don't matter you can you can call any of these you know setups any name whatever the case is now what it goes down to it goes down to having a criteria entry criteria exit criterias right what are entry criterias for my morning flush strategy what are entry criterias for my opening range breakout so if I go on my opening range breakout uh strategy and I'll show you a Playbook example up here you guys will see
the entry criterias and exit criterias that I have laid out and every time I take a trade I have to make sure that these entry criterias align so the entry criterias could be market conditions right it could be conditions for that particular stock particular instrument for example uh for opening range breakouts I look for gaps that's one thing I look for I look for gaps right I look for news right I look for you know depending on and and this is all dependent on What markets you trade so if you trade stocks you are looking
for some pre-market activity before the market opens uh you are looking for gaps in the New York session open uh or you looking for a high arval right and once again these are contingent to what your setups are what your approach to the market is so for Ral I may be looking for relative volume I may be looking for higher pre-market move uh supported by volume right these are where my market conditions or entry conditions May line up with this particular setup now when I have this setup laid out my job then becomes to back
test guys back test back test back test back test back test make sure you back test a strategy all the way now when I back test a strategy I am applying the same rules that I have and I'm using these rules to basically have a strong understanding of Entry criterias that I may I may use in the past and I may use in the future when these rules are set out I then go back in time on particular instruments and I test how these rules play out if I was to trade this particular way and
I would do this over and over and over again and I would track this data right by identifying strengths and weaknesses of that setup what are the best times this setup works and I would get myself comfortable once I am done back testing this setup I then go and I forward test right with real Capital right very small money I test this strategy I test this approach to the market and I test it for some time until I have a good amount of data once I have a good amount of data I will then go
and apply it to real markets and scale up more money now once that is done that is where emotions pop up that is where your psychology needs to be mastered up until I have a way of trading correctly up until I have playbooks that are tested I have an edge that showcases that it works it makes money it has a high R multiple maybe it has a high win percentage based on whatever the edge or that approach to the market requires once that is done like I said that is where emotions then pop up when
I go into the real markets and I put put in more capital and I start scaling up and I start being aggressive yes my emotions will pop up but I will hesitate on executing some of my setups I will be scared of taking a loss and I may sell early or I may sell too late or I may not want to take the trade from you know various reasons that is when this becomes a big big thing so as I was saying you know having an edge right and and mastering your emotions is what will
make you a successful Trader but the problem with Traders is that they jump into emotions without ever having a proper Edge so depending on where you are in your trading career number one make sure that you have a proper system that is back tested that is proven and then that is forward tested with very minimal capital and I say very minimal Capital because if you de with minimal Capital you you you won't be really mentally invested to allow your emotions to overtake your emotions start coming in when you have tons of capital but if you
do with small Capital it's easy to just gauge that strategy working or not and then once you scale up now you're like okay well now I know I'm going to have to deal with the emotion part don't get trapped into the same trap that I was in and guys and I know a lot of people are in the same trap where we just keep blaming trading psychology trading psychology emotions emotions emotions and once again that's a fair statement only when you have developed an edge
