Trading Psychology – Find an edge with these tips

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Trading Psychology

Trading psychology plays a huge part in the success, or otherwise, of every trader. There are a whole range of factors that will influence the psychology of the trader, but many of them are under your control. Learning to manage these factors can give you and edge, so read on for tips on how to ensure your mental state is working for you, not against you.

Psychological Edge

I truly believe that the top trait that separates successful from unsuccessful traders is the ability to stay patient and wait for only the best set-ups. In my spot forex trading (trading off the four-hour and daily time compressions), I largely avoid this issue because I’m setting limit orders, stop losses, and take-profit levels all at pre-determined points in the market.

However, in binary options with strike-entry brokers, I don’t have that convenience, so I’m forced to wait and play close attention to the charts to execute a trade exactly where I want it to be.

This is, in my opinion, what makes binary options trading so much more difficult than swing trading spot forex. But mentally I don’t have an approach to binary options that is fundamentally any different from the way I approach forex. Strategy-wise, it might be slightly different since I’m waiting for confirmation to take a trade at my price levels in binaries, whereas in spot forex I simply enter in a limit order price and the trade triggers automatically if the market reaches that level.

With regard to my mental approach, I always have everything planned out – specifically what level I’m targeting potential call option set-ups, and what level I’m targeting put options right down to the tenth of a pip. Sometimes I may only be considering one type of option (call or put) if the trend is sharply in one direction or another.

In rare instances, I may not be considering any type of trades at all if the market is simply too wild (e.g., impending important macroeconomic news releases). And if the market does get to the level I’m looking at, I’m not just excitedly hitting the button to take the trade, but rather waiting for price to reject that level and taking the trade if it touches on the next candle. Then and only then am I taking the trade.

Always stay patient when trading, even if that means looking at the charts for eight hours yet not finding a set-up worth trading. Exercising patience is the same as exercising rationality, as it’s a uniquely human ability and exercises higher-order cognitive functions, and not the more primitive parts of the brain that take over when an individual trades emotionally.

Trading Problems

Overtrading is a definite problem for many individuals and is probably the number one trading-related issue that prevents many from becoming good traders. It only makes sense. People want to make money quickly and binary options do seem like a good means to rapidly multiply your available capital. Therefore, they trade a lot as if they’re trying to compel the markets to make money for them. It takes a certain maturation process to understand that you’re not going to become rich right off the bat in trading, especially since lowly capitalized traders tend to be beginning traders.

Then again, if you’re eyeing a certain price level, be confident in your set-ups. On the other side of the spectrum, being “overly patient” and “undertrading” – i.e., having issues pulling the trigger – is another problem that definitely affects traders. In fact, in many cases a trader might have both issues at some point or another. But when trading a support and resistance based strategy similar to what I use, you should always have your price levels planned out ahead of time and take your trades when you receive validation that they are likely to hold (similar to the touch-rejection-and-retouch strategy I’ve discussed in my recent trade analysis posts). And, of course, ensure you are keeping your trade sizes small enough such that you have absolutely no emotion over the outcome of the trade.

If you’re ever experiencing anxiety over a trade’s outcome, I can safely assert that you have are putting way too much money into a single trade. When deciding on an investment amount, it should be so small that it almost feels like a waste to even take the trade. By that, I mean you should be investing less than 1% of the money you can afford to lose (leftover disposable income) on any given trade.

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Also, never ever set a certain profit target for the day. Or even the week, month, or year. This never turns out well, as inevitably failing to meet that monetary target routinely causes individuals to trade emotionally because money – instead of trading the market – becomes the primary mental focus.

Trying to recoup previous losses by doubling up, tripling up, quadrupling up, and so forth in Martingale-style fashion will result in disaster at some point sooner or later. I believe the best strategy for traders is to invest a relatively small, fixed amount of money on each trade. As you become more advanced and can sufficiently assess the general probability of a trade working out, you can be afforded some leeway and mix up the amounts from time to time.

But as a binary trader, you should be focused on your winning percentage (60% in-the-money is a realistic goal). If you are achieving your desired winning percentage (which, of course, should be above break-even) and keeping a fixed-amount money management strategy in place, you can consistently make money doing this.

Psychology of Trading

Obviously, there are several mental and emotional hurdles that traders encounter on their trading journey. Of all the issues I discussed above, I personally went through every single one of them at one point and wiped out several accounts in the process. But in all honestly, finding an effective strategy wasn’t my biggest issue at all. With some refinement, I’ve basically been using the same price level-based strategy since I first began trading seriously roughly two years ago. There are many excellent technical analysts out there, but there are a much smaller number of consistently profitable traders. That, of course, resides in the fact that you have to master the mental aspects of trading before you can truly become good at it.

The good news is that learning these things is not difficult. As a matter of fact, you probably found everything I just said very self-evident. Truth be told, just about all of us have been good at a certain activity or profession in our lives. But whatever skills we needed to be successful in that endeavour very likely has little to no relevance to what it takes to being successful as a trader.

It just takes time, practice, and the right mindset toward the markets. If an individual can master and ingrain these seemingly simple and common-sense psychological tidbits and combine it with an effective strategy and money management plan, he or she can ultimately become a profitable trader.

Trading Psychology: 6 Practical Tips to Master Your Mind and Money

Last Updated on December 9, 2020

Cut your losses and ride your profits.

But when the time comes, you do the exact opposite!

Because of your trading psychology.

When you’re supposed to cut your losses, you hold onto your losses… hoping it turns around so you don’t suffer a loss.

When you’re supposed to ride your profits, you exit your winners… fearing that it might turn into losses.

And this is just the tip of the iceberg.

I get it. I’ve been there myself. I know what you’re going through.

So in today’s trading psychology post, you’ll learn 6 insanely practical tips to master your mind and money.

I’m not going to give mumbo jumbo advice and tell you to be a more disciplined trader. You know that already.

Instead, the question is… how?

So, here’s what you’ll learn in today’s trading psychology post:

Then let’s begin…

Get a job and overcome most of your trading psychology issues instantly

I know this may sound weird…

…but having a job (or an alternate source of income) improves your trading psychology and results.

  • It removes the need to make money syndrome
  • It lets you grow your trading account quickly

It removes the need to make money syndrome

Here’s the thing:

If trading is your only source of income, you’re putting yourself at a disadvantage psychologically.

Because you will have the need to make money every month.

This cause you to make poor trading decisions like widening your stop loss, averaging into losers, trading too large, and etc.

And that’s why many Professional traders do not rely on trading as their only source of income.

Don’t believe me? Let me prove it to you…

Ed Seykota, a Market Wizard, has a trading tribe that cost $99/month.

Mark Minervini, a stock Market Wizard, offers a master trader program that cost $5000.

Most hedge funds (even the best ones) charge a management fee every year —even if it’s a losing year.

To put things in perspective, if you run a billion dollar hedge fund and take a 2% management fee, it means you get $20m a year — guaranteed.

As you can see, professional traders and hedge funds structure their trading in a way that it’s not their only source of income.

So what can a retail trader like you do, if you want to level the playing field?

Simple — get a job.

If you have a job, you have a source of income every month no matter what. This allows you to focus on your trading without having to worry whether you can pay the bills this month, or not.

And that’s not all because…

It lets you grow your account quicker so you can trade larger and make more money

Here’s the thing:

You need money to make money in trading.

Let’s say your average return is about 20% a year. This means…

On a $1000 account, you’ll make about $200 per year.

On a $100,000 account, you’ll make about $20,000 per year.

On a $1m account, you’ll make about $200,000 per year.

So now the question is…

…how do you increase the size of your trading account?

Well, you can use a portion of your income (from your job) to increase the size of your trading account. This means you can trade larger and make more money.

And in my opinion, this is one of the best things you can do for your trading — having a full-time job.

Backtest your strategy and gain massive confidence in your trading

Here’s the thing:

One of the biggest struggles you’ll face is having the confidence in your trading strategy.

If your trading strategy doesn’t have an edge in the markets, how do you find the conviction to trade it during a drawdown?

And instead, you’ll start looking for the next “best” trading strategy — and the cycle rinse repeats itself.

So here’s the deal:

To break out of the cycle, you must have an edge in the markets so you have conviction in your trading strategy.

So, how can you go about it?

This refers to how your trading strategy works with past data to decide if it has an edge in the markets.

Now, if your trading strategy is proven to work using past data, then there’s a good chance it’ll work in the future — which gives you confidence in your trading, right?

So, here are 2 ways you can do it:

  1. Manual backtesting
  2. Systematic backtesting

Manual backtesting

This refers to backtesting your strategy in a manual fashion. You would literally scroll through your charts and analyze the market as it unfolds bar by bar.

However, there are pros and cons to this approach.

Pros:

  • You don’t need any special skill
  • You’ll learn to read the price action of the markets

Cons:

  • The results might not be accurate because of hindsight bias
  • You don’t know what’s the overall risk on your portfolio

If manual backtesting is for you, then here’s how to do it step by step…

1. Know the trading setup you’re looking for

Before you can do any backtest, you must know what is the setup you’re looking for (whether you’re trading pullback, breakouts, and etc.).

Then, develop a trading plan so you can identify your trades objectively.

2. Scroll back to the earliest starting date of an instrument

Next, go back to the earliest date you can get on your instrument. For the daily timeframe, you should be able to go back a few years on TradingView or MT4.

3. Move the chart forward one bar at a time and look for your trading setup

This is where the fun begins. Imagine whatever in front of your screen is the “live markets” and you’re trading it in real-time.

This means your Support & Resistance must be plotted, your relevant indicators should be on the screen, and etc.

Then look for your trading setups as the price unfolds bar by bar.

On TradingView, you can move forward (bar by bar) by pressing the arrow key. And for MT4, it’s the F12 key.

4. Journal your trades

Once you’ve identified your trading setup, you want to record your entry, stop loss, exit, and R multiple.

Repeat the process till you arrive at the current date. Then gather all the data you’ve recorded to see if you have an edge in the markets.

If you’re a currency trader, there are tools like Forex Tester 3 that helps you to backtest more efficiently.

Now if manual backtesting isn’t for you, then check out your next option…

Systematic backtesting

This refers to backtesting your strategy is a systematic manner using a programming language like Python, R, and etc.

Here are the pros and cons to this approach:

Pros:

  • You can backtest your strategy in minutes
  • You know what your overall portfolio risk is

Cons:

  • You might curve fit past data which leads to a strategy that doesn’t work in the real world
  • You require programming knowledge

Now, systematic backtesting isn’t my area of forte so I can’t teach you how to do it.

But here are some resources that could help you…

Codeacademy — Learn how to code for free

Norgate — Premium data provider for your backtesting needs

Amibroker — Powerful backtesting software

Joemarwood – A trading blog that shares practical tips & tricks in systematic trading

If you don’t want to learn, you can always hire someone to systematically backtest your strategy.

Use the Star System and improve your trading results

The Star system is a technique I’ve developed to help traders get consistent results.

But before I get to it, let me ask you a question…

Have you ever tried using a trading strategy and after a few losses, you decide that it isn’t working and start looking for the next best strategy?

That’s a big MISTAKE.

If you are constantly hopping from one trading strategy to the next, how do you expect a consistent set of results?

The bottom line is this:

To have a consistent set of results, you need a consistent set of actions.

But the question is… how?

Let me introduce to use the Star system I’ve developed to help traders be consistent in their actions.

Here’s how I came up with it:

Remember when you were in kindergarten and you did well for an assignment, your teacher will give you a sticker in the shape of a star (rewarding you for a job well done).

And this is how the Star system works…

  • Develop a sound trading plan that dictates your entries, exits, trade management, and risk management
  • Every time you follow your plan, you get 1 star
  • Every time you didn’t follow your plan, you get -2 stars
  • The goal of the Star system is to accumulate 100 stars

If you realized, you get penalized badly whenever you deviate from your plan. This is to make sure you follow your plan wholeheartedly and nothing else.

Because here’s the thing:

If you can be consistent with your actions, then you have a good chance of becoming a consistently profitable trader.

Why you should be rich

Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like — Will Smith

When you hear someone talk about traders, you immediately think of Ferraris, Mansions, and hot chicks, right?

But here’s the truth…

An extremely small percentage of it happens in real life (and I’m talking 0.001% kind).

Because here’s the thing:

In trading, you’re dealing with probabilities. You will have winning months and LOSING months.

You want to save up during the good times so you can withstand the bad times — and not get blown out. In other words, be FRUGAL.

But if you’re spending recklessly on material wants, it puts pressure on your own trading.

You’ll have thoughts like…

  • How am I going to pay my mortgage of my mansion?
  • How can I impress those around me?
  • How can I upkeep my Ferrari?

And as you know, this leads to the need to make money syndrome (as mentioned earlier).

So what happens?

You end up making poor trading decisions that cause you to blow up your account.

So the bottom line is this:

The goal of trading is to be rich — NOT act rich.

The Matrix Technique that makes you feel numb to losing trades

Good trading involves following your trading plan and having risk management on every single trade.

There will be wins and losses but, if you have an edge in the markets, you’ll make money over time.

But here’s the thing:

When you’re trading in the NOW, your logic gets thrown out the window and you’re left battling against your emotions.

You watch every tick of the market.

You consider widening your stop loss so you don’t take a loss.

You wonder if you should take profits now in case the market goes against you.

If you think about it, that’s silly right?

Fussing over the outcome of a single trade when it’s random.

So, how can you suppress these emotions in real time and improve your trading performance?

Well, let me introduce you The Matrix Technique.

If you watched the “Matrix” movie, you know that humans are plugged into the matrix and detached from reality.

And this is what you want to do for your trading, to detach yourself from the outcome of your trades.

Whenever you’re emotional over your trades, ask yourself…

“Are you following your trading plan?”

If the answer is NO, exit the trade immediately and stop trading (whether it’s a winner or loser).

If the answer is YES, set your stop loss and walk away from your terminal (knowing you’re doing the right thing and your risk is contained).

This is simple but it works. It detaches you away from the outcome of your trades and keeps you focused on following your plan.

How to overcome the psychological pressure of trading full-time — even if you have a family to support

If you have a family to feed I won’t suggest you trade full-time (unless you know what you’re doing).

The pressure to make money is so high that it harms your trading performance.

You’ve got bills to pay, mortgage, and your kids to feed.

Still, you might want to trade full-time because of the freedom it brings, no boss to answer to, and no politics to deal with.

If that’s you, then here are 6 practical tips to help you out…

1. Have a partner who works full-time and can support the family.

It’s a huge advantage if you have a partner who supports your trading wholeheartedly.

This lets you focus on your trading without worrying about the bills or putting food on the table — and removes a huge pressure off you.

2. Save up 12 months of living expenses before you make the transition

But what if you don’t have a partner?

Well, no worries.

You can save up enough money that covers at 12 months of your living expenses (and this excludes your trading capital).

This allows you to trade in peace knowing that even if you didn’t make money this month, your living expenses are still taken care of.

3. Contribute to the household income once every 6 months

Trading is all about probabilities and you need time for your edge to play itself.

This means you may not make money every month but given a long enough timeline, you should be profitable.

So, a solution to this is to contribute to the household income once every 6 months instead of every month.

4. Work part-time jobs to have an extra source of income

You can take up part-time jobs to supplement your trading income.

For example: Giving tuition, Waitering, Bartending, and etc. Basically, whatever it takes to provide an additional source of income outside of trading.

5. Educate other traders and get paid for it

You can educate other traders through own courses or coaching programs — and get paid for it.

  • Conduct a live seminar
  • Create an online course
  • Conduct a mentorship program
  • Offer private 1 to 1 coaching
  • Write trading newsletters

It’s a common approach used by many successful traders like Mark Minervini, Andreas Unger, Peter Brandt, and etc.

However, it’s suitable only for those who are consistently profitable. If you’re not, don’t worry because the next option is for you…

6. Recommend trading products and services you believe in

Now I’m sure you’ve got some trading products or services that you enjoy using.

So, why not get paid to refer other traders to use it?

If you’re happy with your broker, you can recommend others to sign up an account and get a referral fee.

Or if you enjoy using a certain charting platform (like TradingView), you can refer others to it and get a referral fee.

You should only refer products or services that you believe in and not because you want to earn a quick buck. That’s your moral obligation.

Summary

Here’s what you’ve learned in today’s post:

  • Get a job and overcome most of your trading psychology issues instantly
  • Backtest your strategy and gain massive confidence in your trading
  • Use the Star System and improve your trading results
  • Be rich — NOT act rich
  • The Matrix Technique — detach yourself from the outcome of your trades
  • How to overcome the psychological pressure of trading full-time — even if you have a family to support

Now here’s what I want to know…

Are there any techniques or strategies you’ve tried that improves your trading psychology?

Leave a comment below and let me know your thoughts.

I always enter with a pending order above the previous candle high for long setups. Stop loss is on previous candle low, so the risk us always 1 ATR. Helps me not to widen stop loss.
For exit I use bigger time frame ATR Channel.

Thanks so much for the advice Rayner. Getting a job and the matrix method made so much sense to me.

Thank you for sharing, Abhinav.

Awesome post Rayner. Thanks for sharing these trading psychology tips in so much detail. I totally agree that without a foundation of good psychology traders will struggle (even if they have a winning system). I’ll be sure to share this post with my followers as some of the things you’ve touched on have made a huge difference for me personally!

Awesome to hear that, Jay.

Glad to hear it helps!

The most real advise I have seen on the Internet about trading….great write I must say…no one can say it better.

I appreciate the kind words, Peter.

Thanks a lot for sharing Rayner. I do something that helps me on my psychology and that´s having a proven and quick method to earn money on the markets to not worry about the results of my trading. In other words, I use a technic that gives me profits everymonth but it is not the trading I like, so I use it only to grow capital and dont feel the preasure to win or earn money, so I can focus on catching a trend as I feel bad everytime I do a good trade but it does not become a trend and It go against me and took me out with loosees. Always using a very low rick so I dont loose capital. Cheer! and be happy!

Thank you for sharing, Erick.

Glad to hear you found something that works for you!

After reading your articles i have realized that there’s much to learn which i have been overlooking . Thanks Brother.

You’re welcome bud.

Don’t hesitate to let me know if you’ve got any questions, I’ll be glad to help.

Very informative and eye-opener, For new trader like us.

Glad to hear that, Dhaval ��

Thanks for your advice.

Having a good guru will improve one’s trading psychology. A guru who guides you step by step and even informs you when he takes up a trade so that you can follow and discuss with him in detail about the set up.

Thank you for sharing, O.

I read your trading psychology articles and it is valuable asset for me .

You are right to claim not only successful trader but also really “SUPERMAN” .

Thanks so much Rayner. How did you know I was struggling. When I began in a super Bullish market I got a lot of advice. I picked a stretegy and backtested it. Then this August September the Breakouts were all becoming False breakouts. It’s hard to short a post break out stock when it doesn’t break more than 5-6 pips. Doesn’t even cover commisions and slippage. I have been in denial about have a viable , profitable strategy. On top of it my Canadian brokers has a low inventory of short floats. I am lost and losing. And this marvellous email comes into my inbox Yesterday. Thanks so much . You are the best Rayner. Back to the backtesting and I’ll implement the Star system. Getting over my fear of losses is my big challenge and a daily work in progress. Thanks for pointing that out. Cheers. Bruce in Montreal.

I hope it helps, Bruce.

Don’t hesitate to let me know if there’s anything, I’ll be glad to help.

Thanks for the tips and for all you do to help and to educate “we, the traders.”

Your training videos are the best!

I use them to supplement my Apiary Fund training.

Thanks again,
Charles Moeller

I’m glad to hear it helps, Charles.

All the best for your training!

Hello Ray. I’ve only recently read your articles and recommendations.

For over 15 years I am an experienced trader, and I want to congratulate you on your professionalism, honesty and sharing of your knowledge acquired in this area.

I agree 100% with everything you wrote in this article in particular, and I want to thank you for sharing your experiences, because you contribute to form the next generation of traders with more positive and sustained results in time.

I’ll share your articles in my networks and with my followers on linkedln and twitter.

Keep up the great work you’re doing.

Thank you for reaching out. I appreciate your kind words, my friend.

Wow,great article especially to me as I struggle with consistency and I believe the pressure of being broke is the reason. I am definitely getting a job but not loosing focus on the goal.

glad to hear that bud. cheers

Hi, thanks a lot for your postings it’s fantastic to read your suggestions . I have been trading for last 4 years and it has been good experience I am doing better and better with all the help from people like you and trading composer.

I’m glad to be of help ��

Awesome post sir.

I just wanted to add, that following your plan is paramount, as we cannot control the outcome of our trades. Also having a day job, relieves so much pressure to making a profit every month!

You hit the nail on the head. All of these tips are exactly what contributed to my trading success. Thank for the share! A definite bookmark!

$20 is a 1% stop loss on $2,000. Use the Williams%R when it’s oversold, then buy diversified, commission-free ETFs and immediately use a 1% stop loss order on all of them. The more boring the ETF is the better! Even if one is a “minimum volatility” ETF. Instead of trying to get the “perfect” setup on one stock, get a pretty good setup on 650 out of 775 stocks. At least you probably won’t lose your $20, and most likely make a positive return instead.

Thanks for sharing, Dan.

Thank you so much! Keep sharing …

Thank you for the article. Some very useful tips. I have been trading now for many years, and have read many books and have been on a few courses as well. To-date I have not been able to become a consistent trader, winning some and losing some, and having blown a few accounts along the way. Luckily I have other business interests such as real estate, and my wife has a handsome income so I am not rushed to make money from trading. However, it is frustrating that after sending so much effort and money I cannot become consistent. From my several years of trading, I have filtered my experience into a number of conclusions, which I am sure many traders will already know: (a) Do not over trade. If you are a day trader like me stick to 3 to 4 trades max, anything more than this you begin to give back any gains that you may have made. (b) Be PATIENT. Be patient to wait for your set-up to materialize, do not jump the gun. Wait, wait and wait until your set-up hits you squarely in the eyes. (c) Be PATIENT. Once in a trade be patient and let the trade work out. Don’t be eager to close the trade, wait until it gets to your pre-defined target, and don’t jump out of the trade prematurely at the slightest retrace, the market will always try to get rid of the weak hands. To remove emotions from the trade, which I think is impossible, have a pre-defined stop loss and a predefined profit target. (d) If you’re a day trader, and even for swing or long term traders, once you have hit your stop loss, don’t think about the trade anymore, move onto the next trade. Just try to learn something from the trades that went south or made a profit. Just like me keep learning until you make it….:)

Great list, thank you for sharing. I appreciate it.

How to find an edge in the markets (a proven approach)

Last Updated on July 31, 2020

A few weeks back, I heard someone asking this question:

“How do you find new trading strategies and setups?”

Now the truth is… setups and strategies are useless if it doesn’t have an edge in the markets. You can have the best risk management, correct trading psychology but, without an edge, you’re still going to lose money in the long run.

Instead, a better question would be… “How do I find an edge in the markets?”

Now, if you are interested to know, then today’s video is for you.

Because you will learn…

  • The SECRET to finding an edge in the markets
  • How to profit from losing traders (by thinking one step ahead of them)
  • Practical trading techniques which give you an edge

If you are still struggling to find an edge in the markets, then today’s video could be the answer you are looking for.

So, click below and find your edge:

Once you’ve had a chance to watch, I’d love to know…

How did you find your edge?

Leave a comment below and let me know.

Do you want to learn a new trading strategy that allows you to profit in bull and bear markets?

In the Ultimate Guide to Trend Following, I will teach you this powerful trading strategy step by step, along with charts and examples.

Great video Rayner! I think the concept of Edge is something all trend followers can appreciate. And not only that, in my experience it takes some time to fully appreciate that edge materializes over a series of trades. As Mark Douglas has said, technical analysis doesn’t predict what will happen on the next trade, but it does help put the odds of success (over the long term) in our favour. Just keep placing those positive expectancy bets – of course, that’s predicated on having a great edge! Thanks again for your enthusiasm and great trading tips.

Well said. I couldn’t agree more!

great video, explexplaind very well

thank you
regards Matt

Thanks Matt. Hope it helps!

hi
i would to know when the price will stalled

Swing points in the markets are possible areas you should look at.

Thank you for another insightful video. As a new trader, I am still struggling with the idea of finding an edge in the market, and you just explained it all in very clear and simple way. Thank you for sharing.

Awesome to hear that! Don’t hesitate to let me know if you’ve got any questions, I’ll be glad to help.

As always thank you my friend for the video you made me realise that I’ve done the correct thing with USD/MXN and I also wanted to thank you for the Traders fest it was great to get some good inside view on what other trades do.. I would love to become the Bruse Lee of trading some day have a different tecnic for every scenario I hope my hard work and effort pays off some day… Take care

Thanks for reaching out. Glad to hear you enjoyed TradersFest.

Don’t hesitate to let me know if there’s anything, I’ll be glad to help.

I watched the whole video but at the end, found that not all parts of it was useful. When you said that to have an edge you need to find points where the traders trading in an opposite way to you feel the pain and then try to profit from them, that in itself can be a toss up between a win or a loss for you who is trying to profit off other groups of traders. You might or might not have an edge when you try to profit off the losing trades of other traders. Out of say 100 times that you do it, you only have an edge if you win 51 or more times. But what you said in the middle of the video, something about finding a set of conditions under which you would trade only if these conditions exist to get an edge, I agree with. With backtesting and forward testing, if say when conditions A, B, C,D exist, out of 100 or 200 times when all these conditions exist and you took a trade, as long as you win 51% of the time you can say you have an edge, albeit a small one. The larger the sample size and the larger the win rate, the better for you as you can be more confident when taking trades, without worrying about or even caring who you are trying to profit off. That is all there is to finding an edge, to find a set of conditions which when they occur together, lead to you winning more than you lose. No need to care about who is on the other side of the trade coz for most retail traders, it would be their broker who can see where your stops are. If you can win more times than you lose against your broker, and if your average wins in dollar amounts are at least equal or larger than your average losses in dollar amounts, then you will be in the 5% or less group of traders who make profits from trading. I am not disagreeing with what you said in the video, just felt that there’s no need to over complicate matters.

Thank you for sharing your thoughts, Tuck ��

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