3 Simple Day Trading Concepts That Will Rapidly Transform your Results (Wish I Knew These Sooner...)

today i want to share with you three simple concepts that rapidly improve my own day trading skills if you're anything like i was at the beginning of my day trading career your account and emotions probably look a bit like a roller coaster you probably had a starting balance at some point you probably had a really good winning streak of trades that made you feel like you were on top of the world holy crap i can quit my job i can start trading for a living and directly after that for me it was always followed by a losing streak that outweighed that winning streak i felt depressed and almost like completely giving up on trading this pattern and process lasted over 12 months for me at the beginning of my trading career until i discovered the three concepts i'm gonna be sharing with you today so if that sounds good i want you to go ahead and click that like button for me if you're brand new here we come out with videos like this each and every week so click that subscribe button along with the notification bell and i'll see you directly after the intro and disclaimer [Music] welcome back and just in case you're brand new my name is steven i've been trading for over 10 years and i've been teaching traders around the world for over six i have a insane passion for giving away lessons just like this one for absolutely free so let's go ahead and get started with day trading lesson number one now i personally trade in the forex market the rest of these concepts will be applicable to any financial market you trade in but this one is specifically applicable to forex as you can see lesson number one is to only trade pairs with historically low spreads at the beginning of my trading career i lost so much money without understanding the concept i'm about to show you so spreads are nothing more than the difference between the price that you can buy an asset like a forex currency pair and the price you can sell it and what this does you can see our spread here on trading view in the top left right now the aussie new zealand has a 7.2 pip spread now let me tell you why this is a problem right here you can see the price you can buy the aussie new zealand at and what is that price 1.1076 right now i have a blue horizontal line at 1.1076 why does this hurt our day trading well as you can see price is currently at this number which is 1.1073 but even if we buy right now where price is on a chart at 1.1073 the close of that green candle where we're actually buying in is price plus spread which means we're buying in right here now the reason this is detrimental to day trading is because look how bad this excuse our reward to risk ratio now instead of a 1.4 we're like a backwards reward to risk ratio just because of the spread the spread also works in the opposite direction meaning price could go down just a small amount and you could get stopped out due to the spread here on the aussie new zealand now this spread does not necessarily affect us in a super major way if we're trading on four hour time frames and above but if you're on the one hour time frame and below what this does because you're day trading obviously you're gonna have a smaller stop loss because the amount of pips you're going for the amount of pips you're willing to lose is going to be smaller on day trading time frames so with that being the case what the spread does is it ends up you entering into a trade and then price going down a lot less than it has to for the actual candle to hit your stop loss and then it stops you out what i mean by that is if a candle printed right here and it did this and this was a red candle you would be stopped out even though the candle didn't touch your stop loss and the reason is because you're trading a currency pair that has a higher spread and this is why we want to make sure and this is why day trading lesson number one is to only trade currency pairs that have historically low spreads now what i'm gonna do is actually show you the top five historically low spreads currency pairs the top five currency pairs with historically low spreads let's go ahead and take a look at those so right here straight from investopedia these are the top five currency pairs that have the lowest spreads historically on average as you can see they are the euro dollar the pound dollar the dollar canada the dollar yen and the euro yen so again i think this is one of the most overlooked parts of day trading in the forex market is to ensure that your trading pairs with low spreads because otherwise your stop is going to get hit quite early compared to when you thought it was and you're going to ruin your reward to risk ratio on your entries unless you're trading these five currency pairs or similar currency pairs to these that have really low historic spreads let's move on to the second concept that rapidly increased my day trading skills and if you're wondering why doing this and only sticking to low spread currency pairs increased my skills is because i started losing a lot less trades when i started applying this concept and my reward to risk ratio increased dramatically let's move on to concept number two day trading lesson number two is you only want to trade based on a rules-based strategy that has proven to be historically profitable i'll explain all that in just a second but the reason this is the case is because whenever you first start day trading there's a lot of information out there you're being hit with a ton of different strategies from different youtube videos different lessons you see on baby pips different versions of technical analysis fundamentals you need to use the news all of this different information and what happens is if you don't sit down and create or learn a rules-based strategy that is proven to be profitable in the past then you're just going to confuse yourself constantly switch strategies trade based on different things and that is going to cause your trading to look like that roller coaster it's going to cause your account and your emotions to do this and eventually drop low enough for you to blow your account if you don't change it so how do we change it well as traders we're not trading based on a feeling we're not trading based on what we think might happen we're not even really trading based on just technical analysis by itself we're trading as professionals we trade based on statistic advantages meaning if i combine these technical factors these very specific technical factors over and over throughout a large sample size then that's proven to be profitable in historical data so even though i'm sure you've seen other people and even me myself break down a chart right breaking down a chart just doing analysis that's not how someone's profitable you could know technical analysis you could know how to break down a chart like the back of your hand but that doesn't equal profitable trading that's just being able to break down a chart what you have to do is create consistency out of those skills so you have the skills of breaking down a chart right let's say you do know technical analysis like the back of your hand but you're still not profitable the reason is because you haven't created consistency around that skill the way you create consistency around that skill is by creating a rules-based strategy based on technical analysis or based on fundamentals it can be based on both there's nothing wrong with combining news events and fundamental analysis of economies with your technical analysis but you do need a rules-based way of trading that has been consistently profitable at least through historic data so you know it's likely to be profitable in the future so what's the first step of creating a rules-based strategy i do that through a process i call c-e-s-t c-e-s-t this stands for conditions conditions would be all the things i need price to do before i look for an entry reason these would be things like i need price in trend or i need price to be consolidating i need price to be oversold overbought against a moving average above a moving average i need the macd to have just crossed all of those would be examples of conditions right next up i need to see or have a set in stone rule 4 entries this is the process of building a strategy around a very objective form of rules a very objective rule set is create your conditions you need to see before an entry then i also have to have an objective way i enter the market a lot of times this might be something like a candlestick pattern it might be a candlestick pattern followed by a green candle it might be a candlestick pattern followed by price going above it it could be a pullback after some type of candlestick pattern a fibonacci retracement you get the point your entry does not matter i'm not saying there's a perfect entry out there what i'm saying is you better have a rule for exactly when you press the buy or sell button otherwise you're going to be inconsistent and lose money as a trader the other thing i must have is a set in stone rule for my stop loss where am i wrong and when am i going to get out of this trade that's where my stop loss needs to be i'm not going to leave an open-ended stop-loss because at that point you could lose your entire account on one trade it's just silly right you'd like some rules for your target at first it probably needs to be set in stone you need a set in stone rule for all these in order to build a rules-based strategy now you don't have to go out there and try to just build one of these yourself that takes years there are so many different strategies that you can learn here on youtube and then just apply cest you can take the concepts of whatever someone else may be teaching and just apply this to those concepts and go okay well it looks like these are the conditions that need to be met it looks like this is what they're using for an entry let me make that set in stone somehow with a set of rules it looks like here's where they normally place their stop loss how can i make a rule around that hopefully you're getting the point the point is you want to have rules in place that you're trading based on so you're not constantly switching strategies being inconsistent with your trading and what this is going to allow you to do is find a consistent way to place trades based on objective rules to avoid that confusion and what's the second part of this it has to be proven to be historically profitable how do we do that we do that through a process called back testing so how do you back test well you take these rules that you have created or learned from someone else nearly every strategy we teach here on this channel has cesd it's made from that actually i'll put a video in the description and in the top right hand corner of the screen i think i called it the only day trading strategy you'll ever need and it's literally a strategy based on this so you'll have that already right but proven to be historically profitable you want to back test those rules all that means is you take every one of those rules which is considered your strategy and you test it through historical data test it for the past two to three years and see out of that span of time was what you have created profitable over that span of time was your strategy based on cesd did it make money or lose money what was the maximum drawdown what was the average losing streak it had all of these statistics are things that we need as traders to help us build confidence and to ensure that what we're trading makes money over time and i know that sounds like a lot of work but if you don't do that and you're not willing to do that then i'm going to tell you the absolute truth right now you should quit trading because you're never going to be profitable if you're not willing to put in the work of either learning or creating a rules based strategy and back testing it through historic data in order to build your confidence and ensure that it's something that can be profitable or is likely to be profitable in the future if you can't do that then you're just not meant for trading and that's fine there's plenty of other side hustles out there that can make you a lot of money it's not like trading is the only thing but that's the work it takes to become a consistently profitable trader but this is exactly how you fix that issue and if you do i promise your day trading skills will improve rapidly let's check out concept number three before we get into number three it's story time i just noticed i was editing the video and you can see this really easily this is because i have another passion which is cooking and the other day i got a little overconfident and the avocado oil from the pan jumped up and bit me back unfortunately it's about a second degree burn that is currently trying to heal but now let's move on to day trading lesson number three as you can see lesson number three is all about risk management and what i decided this doesn't have to be your decision you can risk whatever you want to it's your hard-earned money i didn't earn it so i'm not gonna tell you how to spend it risk whatever you want but what helped me avoid that roller coaster of emotions and that roller coaster in my trading was to never risk more than one percent on a specific trade in my day trading now does this mean that you have to risk one percent forever and you could never increase your risk no but if you're starting out or if you're someone who's been struggling for a long time until you learn how to be profitable with a one percent risk you're not gonna be profitable from just risking more money that's not gonna make you consistently profitable it's just going to make you lose money faster so not as a suggestion because this is not financial advice but for me if i was a struggling day trader or someone that was brand new i would not risk more than one percent of my total account value now this kind of goes into the trifecta of things we need in order to be profitable traders so far we've talked about strategy and we talked about the spread right but so far we've talked about strategy and strategy is definitely one of the things we need to become money making traders another thing we need is what we just talked about which is risk management what this did this using one percent or less of my account value per trade is it allowed me to stop making emotional mistakes it allowed me to stop moving my stop-loss or my target based on fear or greed it helped me to really relax in all of my trades and being emotionless if you haven't heard by now is one of the only ways to really become profitable anyone that's trading based on emotions is going to lose money over the long run unless they just get extremely lucky and so if you want to be a consistently profitable trader over the long run you're gonna have to learn how to control those emotions one of the best tools we have to help us control emotions is in fact risk management and not only does this help us control our emotions it also allows us to lose less if we're not profitable yet so you're still in that practicing stage meaning you're either struggling or just now starting to trade losing money one percent of the time trust me i've done it the other way which is losing money a lot more than one percent at a time at one point i was risking five percent of my account value losing it one percent per trade losing it one percent at a time much more sustainable much easier to handle not just emotionally but for your bills for the you have to take care of outside of just i really want to trade it's much easier to still be able to afford your apartment payment if you're only risking one percent per trade now you shouldn't have money in your trading account that you need for your apartment payment but that's beyond the scope of this video and just to finish out this triangle with you trading psychology is the other thing you must have now this can also be known as discipline meaning you have the discipline to stick to your risk management plan you don't get greedy one day because you want money for that lamborghini and decide to risk 10 per trade just because it's a friday and i want a lamborghini i know that's a bit exaggerated but you also are disciplined to the strategy you're trading the rules of it your discipline to the stops and targets the entry reason you don't just jump in out of fomo because you see what you think is a trade that might hit targets what what you really need to understand about all this is that we're not trading based on what we think is going to happen i'm not good at trading because i go out there look at a chart and i can always tell what's going to happen no i make money as a trader because of the fact that i am patient and i wait for setups that i know give me a statistic advantage based on rules-based strategies i've developed and tested and i know for a fact that they are at least historically profitable which give them a very high likelihood of being profitable in the future so as a bonus number four be patient oh i'm gonna i'm gonna screw this up i really hope this is how you spell patient don't make fun of me be patient i don't just mean in looking for trades risk one percent or less this sounds like advice i would risk one percent or less as a beginner knowing that once you become profitable you can risk more if that's what you want to do that's called being patient understand that it may take you three months to to a year to completely master being a profitable trader and that's okay be patient fourth bonus day trading lesson and with that said if you want help from me as a personal mentor mastering strategies that make money over time your own personal risk management and your trading psychology then we have some space available in the tdc fx university feel free to click the first link in the description in the university you will get a full training course walking you through the process of learning all three of these skills in a very organized and detailed way you also will be receiving the pro trader report which are areas in the market i'm paying attention to for the week ahead three to five email analysis each week which are trades i'm placing based on the strategies you're learning in the course yes in the course i teach you multiple rules based strategies and on top of all that you have something called priority email if you decide to join us which means any trading related questions you have you can actually email me directly and i'll be the one responding to those to ensure that you have as smooth of a journey as possible between where you are and accomplishing your trading goals so if that sounds good again it's the first link in the description or you can go to www.ttcfxuniversity.com if you made it to the end of the video feel free to leave me a comment and let me know if this was valuable for you make sure you click that like button make sure you subscribe if you're new and click the notification bell and i'm going to talk to you in the next video see you soon

Channel: The Trading Channel

Views: 174,534

Keywords: day trading, day trading strategies, day trading for beginners, day trading strategy, day trading cryptocurrency, day trading live, day trading crypto, day trading addict, day trading bitcoin, day trading stocks, day trading on webull, day trading setup, day trading dogecoin, how to day trade, day trade like a pro, day trading system, day trading profits, advanced day trading

Id: 8GWVoduDOGM

Length: 18min 23sec (1103 seconds)

Published: Sat Aug 06 2022