If I Had To Restart Again As A Trader, At 20 Years Old - Part 2

How to Match Your Personality with Trading Styles

In this video, the speaker talks about how to match your personality with trading styles. He recommends a book called "The Mental Edge in Trading" by Jason Williams and Larry Williams, which helps traders discover their unique personality and how it might relate to a specific style or approach to trading.

Matching Personality with Trading Styles

• Consider your personality and try to match it with the appropriate trading style.

• There are different types of trading such as scalping, day trading, short-term trading, swing trading, and position trading.

• The speaker's personality lines up with day trading and short-term trading because he is quick-fused and prone to changing his mind frequently. He likes taking a lot of executions and parlaying his equity up.

• Changing lanes many times will take you out of what you're really prepared to do best in. It's important not to change your style just because someone else is doing well in another style.

Benefits of Short-Term Trading

• Short-term trading allows the speaker to keep himself in his own lane without worrying about putting on more stress than necessary.

• The speaker does not have patience for long-term swings. He prefers the frequency of trade setups in intraday charts.

• The speaker tries to milk a specific bias that higher time frames already outlined.

Overall, matching your personality with a specific style or approach can help you discover what works best for you as a trader. Short-term trading may be beneficial for those who prefer frequent trade setups and don't have patience for long-term swings.

Choosing a Market to Trade

In this section, the speaker discusses the importance of choosing a market to trade and sticking with it. He emphasizes that traders should focus on one or two markets that are closely correlated and measure them against a benchmark like the dollar.

Quant vs Instagram Crowd

• There are two schools of thought: quant and Instagram crowd.

• The speaker recommends going with the quant side because it is more analytical and appeals to those with computer science backgrounds.

Importance of Sticking to One Market

• It's important to keep focus on only one market and avoid switching markets sporadically.

• Developing patience is crucial in trading, which means waiting for your setup instead of abandoning your market simply because it doesn't give you an opportunity.

• Professional traders focus on one specific market, narrowing their focus and knowing what they're looking for.

Building a Study Journal

• The speaker recommends building a study journal of backtesting a single market or asset class.

• He suggests starting with the euro dollar and studying market structure by looking at old highs and lows where the market traded above an old high rejected or took out an old low by a lower low before reversing.

Developing a Trading Strategy

In this section, the speaker discusses how to develop a trading strategy by focusing on optimal trade entries and using an hourly chart to identify market structure at turning points.

Using an Hourly Chart

• The speaker recommends starting with an hourly chart to identify intermediate term highs and lows.

• Look for market structure at turning points and key intermediate term highs and lows.

• Focus on finding one setup or multiple setups that would net 50 pips per week.

Back Testing and Study Journal

• Submit to back testing and logging in a study journal for at least six months.

• Take the entire week from Monday to Friday, break it up, and analyze it after the fact.

• Record all trades in a study journal.

Trade Targets

• Set a target for what you believe you can do consistently on a weekly basis.

• Do not set targets based on daily profits as they are difficult to achieve consistently.

• Even in failure, reaching your milestone each week is crucial.

Understanding Market Structure and Price Action

In this section, the speaker discusses how to identify intermediate term highs and lows in the market, study them on a lower time frame, and look for specific characteristics. The goal is to learn how to recognize patterns that repeat over time.

Identifying Optimal Trade Entry

• To build a study journal, start with a simplistic approach using a 15-minute time frame and an hourly chart for the whole weekly range.

• Annotate your chart for your study journal by finding the optimal trend entry that occurs between 8:30 AM and 11:00 AM New York local time.

• Look for an optimal trade entry at the 62% retracement level after a shift in market structure from high to low or vice versa.

• Use hypothetical trades with a stop loss of at least 10 pips.

Building Your Study Journal

• Set up your chart naked with no annotations or indicators.

• Have access to areas in your chart where you can write out your own annotations after the fact.

• Take notes on each day's price action as it is basically a small component or cog in the greater scheme of how these markets move.

Avoiding Emotional Trading

• Desensitize yourself to emotion by building a study journal without any fear of losing.

• Strip trading down into simple pattern recognition approach to seeing something that repeats over and over again.

Risk Management

In this section, the speaker discusses the importance of risk management in trading and suggests a framework for setting up trades.

Setting Up Trades

• Suggests framing trades with a 3:1 risk-reward ratio (risking one dollar to make three dollars).

• Moving stop loss only after the trade has moved 1.5 times what was initially risked.

• Once the trade moves two times what was initially risked, move stop loss to break even.

• Annotate how much time it takes for the trade to move in your favor before moving stop loss.

Targeting Liquidity Pools

In this section, the speaker discusses targeting liquidity pools and how to set up trades accordingly.

Targeting Liquidity Pools

• The target is old lows where there is liquidity resting below.

• Assume that the market needs to go at least five pips below that level.

• Anticipate a five-pip run below where you think it might go so that once it does trade down to that point, you have about a 90% likelihood of being filled.

• Add annotations once you have marked up your chart with all necessary details.

Trade Details

In this section, the speaker provides details on a hypothetical short trade.

Hypothetical Short Trade Details

• Got into the trade at 10:00 AM on a specific candle and got out around 8:45 PM on another specific candle.

• Time in market was 10 hours and 45 minutes.

• Drawdown was 3.2 pips (highest candle went 3.2 pips away from entry).

Understanding Market Fractals

In this section, the speaker discusses how to understand market fractals and how they fit together.

Recognizing Patterns

• The only way to understand how markets are fractal is by doing exercises and teaching yourself by repetition what the pattern looks like.

• There are repeating phenomena and characteristics to these specific very simple approaches to trading that occur every single week.

• All you need to find is one candle or high that's pierced, and if it breaks and has a shift in market structure which is a short-term low right before it creates the runner higher high, then you anticipate an optimal trade entry.

Teaching Pattern Recognition

• You have to strip trading down to that elementary state where you're not influenced by anything monetary or psychological.

• You're conditioning your subconscious to see this pattern over and over again, and as you go through and annotate, you can put more details in there as much as you want.

• These reoccurring characteristics are in the majority of these setups, and you're also going to relate to what day of the week these patterns are forming.

Starting Out

• To eliminate all that fear and performance anxiety just don't worry about that teach yourself pattern recognition.

• Using this approach initially is how he would do it if he was 20 starting all over again just using what's on this youtube channel.