5 Rules Every Trader Must Follow

what's going on traders welcome back to my youtube channel so today's lesson i'm going to be talking about five key points that you need to understand as a trader in order to find that consistency and profitability that you're working so hard towards now did you know that in trading there is no such thing as a bad trade now some of you might turn your nose up at this and say well of course there is well the way i like to see it is there is such thing as better trades but not necessarily bad trades and today i'm going to share five key points or tips that you can follow in order to start to change around the results that you're getting because the problem is in the industry that we're in as far as i'm concerned when it comes to social media and uh trading gurus you'll find that there's so many misconceptions there's a lot of deviation um from the simplicity of what trading is really supposed to be and i guess it's to attract up-and-coming traders to entice him into believing that there is a so-called holy grail or a better strategy or a secret way to trade now i've been trading for 10 years and i'm going to be brutally honest with you the concepts that were used 10 years ago the concepts that were used by some of the most successful traders that have ever lived are still the most successful concepts and strategies that are being traded today now i know there's other variants and there's other ways to look at the market because everybody's perception is different absolutely i'm not against it but i'm definitely not 100 for it in the way that it's been portrayed so today i'm going to really really dig deep into some five or into some into five key points tips whatever you want to call them principles ways to think about the market that you can start to apply in your trading almost immediately it could be whether the markets are open or whether the markets are closed or whether you're now going to spend the weekend thinking about what i'm about to tell you but get out your pen and paper because i can promise you it's going to be an absolutely epic epic video if you're new to the channel subscribe and welcome turn on notifications and as i always say please hit that like button for me if you enjoy the video without further ado let's get into the show okay traders so we're over here now on usd jpy this actually was a trade that was taken by one of my students this week and um i mean we're going to talk about it because this is a very very important thing that i want you to understand as you move forward next week into your trading or whenever you you decide to trade again after watching this video what we have here is really really nice structure um we can see from the upside here that we have strong bearish momentum the trend is clearly moving to the downside granted we did have the market stepping up for a period of time where we had this channel making higher highs and higher lows and eventually we had to break out of this channel back to the downside so looking at what we see here we have one area in the market where price was pushing bullish we have one area here in the market where price was pushing bearish and one area here in the market where price was pushing bearish we have one bullish area two bearish areas and that means in theory we're going to be focused on the bearish side of this structure so now we have a structural high where price in theory never broke above we have strong bearish sentiment we have a break close blow structure we have a lower high and a new lower low so the big question today is this price has made this new level low we have price stepping back into this really nice area of resistance where price once was holding we had a breakout and a break back in which is a sign of indecision and now we have a really nice retest at this level where the balls attempted to break back in through the structure they failed and now we have a really nice strong bearish close so the big question is can we sell this market structure now i want you to think about this for a few seconds because this is not a trick question what i'm going to be doing today is helping you to realize that there is no such thing as a bad trade however how you approach your trades is what matters and after what you do about the result of your trade in my opinion is probably the most important thing because trading is a numbers game you execute you have a win lose or you break even and the theory is you're supposed to do this over and over again what makes it difficult is the fact that we're emotional creatures and psycho and psychologically we get affected by the outcome so think about this just for a few seconds more is this a good entry well in my opinion this is a great entry now as i said there is no such thing as a bad trade but there is such a thing as potentially a better way to approach your trades but regardless if he was to take this in the live markets could you really scrutinize yourself for it could somebody judge you for taking this trade if you were to take this trade a hundred times over what would be the results i think you'd probably come out profitable and i'm talking about 100 trades here not free um so yes i think this is a pretty decent trade let's see what happens okay so we get stopped out now at this stage as a trader you start to question whether you took the right entry what you now start to do is you start to draw resistance levels you start to say well did i take the trade at the right resistance in terms of using the 30 minute time frame did this really break and close blow this structure did price really leave and make a retest was there enough wick rejection or indecision candles and was the momentum strong enough to the downside should i have waited for price to break this structure and retail structure these are all the excuses and or doubts that you're going to start to think about once you lose this trade because this trade loss doesn't make it any worse than uh than it was when you decided to take the trade when it was a good trade no not at all first and foremost let me just tell you something whether you're new to trading or not losses are inevitable you're never going to avoid them and if you try to avoid them then guess what you're going to fail if you're going to come to me with a new concepts and principles that was developed in 2021 and tell me this wasn't a liquidity zone and this is where the buyers are sitting then whatever the point is this it wasn't a bad trade but could we approach this approach this differently well we're using the 30-minute timeframe to identify a key level and as i said this was a trade that one of my students took and then now i'm going to share with you a way you can approach this better but don't let this discourage you if you take this trade 100 times i can almost guarantee you you will make money because the structure falls in line with a burst sentiment and the re-test is there let me show you how we could approach this slightly differently using the 4h time frame now what we can see here is a spare sentiment exactly what we gathered on the 30 minute time frame here we have 11 in the market where price is broken to make a new low the candle that we're looking at here in this stage is this candle here the reason why we're looking at this is because this is where the shift in momentum happens this is the behavior of the market today what we anticipate when price breaks a structure in this formation is that price will eventually come back down to some of these structural lows that is what price does that is structure and nobody can argue with me about that now this is our original retest level this is a level in the market where price is just broken the lower the time frame you go the more retest levels you're going to find so one rule that i want you to follow if you're going to be trading or using higher time frames remembering that this retest level wasn't incorrect based on the 30 minute time frame but if you're going to use the higher time frames is that the closer your entry is to a retest level the higher the chance or probability of that trade working out in your favor so now that we've marked the retest level on the four-hour time frame let's scale back to the 30 minutes so now we're back to the 30 minutes we anticipate price to come back down to some of these structural lows let's remove this level here and let's identify where the retest level where we took that cell so we took a loss on this one again not a bad trade but now notice we have our four hour retest level when you come down to the 30 minute time frame this makes zero sense to most traders but let me tell you something based on higher time frame analysis anything that happens down here on the 15 minute time frame is called noise based on current behavior we want to focus on what's happening here based on higher time frame analysis we want to focus on what's happening here regardless of the noise that is happening here now again it doesn't mean that price needs to respect this structure but let me tell you now what is a fact you don't want to be the type of trader that starts to do things like this adjust your levels to the 15 minute just to validate a trade and you don't want to try and find the perfect resistance or support level in order to validate a trade because it doesn't exist what you need to do is once you draw up on your higher time frames is make sure you focus on those levels and you don't deviate so now price is pulling back we know this is our retest level that is a fact and the structure of the market is indicating a bearish sentiment what we need to wait for as a trader is sure signs that the market is respecting those key levels and as you can see here what do we have our previous retest level almost resembles exactly what's happened here exactly what we're seeing here but the difference is is we have a higher probability key level because we're identifying this on the higher time frame if we wanted to take this trade would that be okay well the answer is yes because we see that price has made a new low we see prices come back to a full h key level we're now starting to anticipate price creating a structural high low high we have a strong bearish momentum candle now the level that we're looking for price to come back to is this level here how you judge or take profits is entirely up to you this trade does push to around i believe two to three r but for this example we're just going to highlight why higher time frame key levels are much more important than trading intraday key levels especially when the focus is higher time frames and as you can see here we win this trade now notice here price came back into this level not once but twice but identify here we have our key our stop loss above the last high that was made above the key level and notice price respected that structure and continued the momentum of the previous 4-h candle which was to the downside here back to the level we anticipate price to react to next so the point i'm trying to make here is this the entry that we took previously here as a self was not incorrect but there is a better way to approach it by using higher timeframe key levels for me specifically is the 4h time frame and look for the same patterns and behaviors so that you can have a much safer stop-loss avoid being stopped out seeing the market go in your direction take into account that no matter what you see to the left is irrelevant as long as the key level lines up with higher time frame key uh structures and then also be aware of where you anticipate price to react to so that you're not too greedy and trying to go for a free r when in theory the range only allows you to have a 1r so that's tip number one let's move on to tip number two so here we're moving on to tip number two i'm going to be looking at pound jp wire on the 15 minute time frame what we can identify here clearly is that the sentiment of the market is extremely bearish we have a level in the market where price creates a support an intruder lower high and a new lower low we also have an area in the market where price came back for a re-test and we also have an area in the market where price has now created a double top formation we have strong bullish momentum into this key level we also then have a wick rejection to indicate a depletion an attempt to break above price failing and a bearish candle close can we take this cell well let's take a of look we can now what happens in a situation like this is traders get really caught up in a couple of things the fact that the sentiment the market is down price has created a double top pattern and we have wick projections and what they then try to do is try to hold this according to their plan so let's say their plan says that the wrist award ratio that i'm going for is a one to two and or the risk war ratio that i'm going for is a one to three because based on my data um when i take double top patterns there is a 67 chance that it will push to a two hour or three hour trade that's completely fine there's nothing wrong with that and in theory if you rely on the numbers and the data then you should be holding your trades one thing you cannot avoid though as a trader is what is happening on the charts even if you believe that price can come back down to some of these major structural lows what you have to be very aware of in terms of the intraday trading is that structure intraday structural lows can be respected it does not mean that price cannot break this structure but what it does mean is that you have to be aware that price can react from this level now our previous example we illustrated that we don't really want to be taking trades from intraday levels but it's okay to do so and in our first example we didn't win that trade from an intraday level in fact we got stopped out here again this is not a bad trade even though we're not using major key levels because it's not wrong to take trades from intraday levels but what is wrong is to anticipate that price can break through intraday levels and that price will not respect those levels and eventually turn around and stop us out so even if we think price can come back to a major level and even if we think that intraday levels can be disregarded or broken should i say we still have to be aware of one thing price can still tap into them and price can still reverse so in a scenario like this does it make this a bad trade that we followed our plan but it stopped us out no but what we can do in a scenario like this is we can identify that we do have a level here in the market where price can react from and a rule of thumb that i advise most beginner traders is that when price pushes to around one to one risk toward ratio what you should be doing in theory is locking this trade in a break even because the truth of the matter is if the markets are going to continue bearish then they are if price is going to respect that double top pattern and continue back down to a major structure low then it is but what you can't do is be the trader that hopes and prays that it will do that without managing that trade and making sure that you are fully aware that the area where price is reacting to is an area in the market where price is not broken yet it does not mean there's going to be a full-blown reversal it just means you need to be aware so an intraday level cell is completely fine aiming for a structure a major structural low is completely fine also because we anticipate the new level o but allowing the market to turn around and stop you out is not okay in a scenario like this lock it in at break even if it goes down it goes down if it stops you out at breakeven there's probably a very good reason for that and just like you saw we got stopped out so be aware this was not a bad trade again because it was intraday level it wasn't a bad trade because you anticipated to come back down to a low and now you got and now price reverse and stopped you out even if you let it stop you out again it's not a bad trade but be aware in situations like this with these kind of structures sometimes it's better to be safe rather than sorry let's move on to tip number three so now we're taking a look at tip number three and we're going to be looking at eur usd on the five minute time frame now what we can see here on this time frame is that we had 11 in the market where price was consolidating and eventually we had a bullish breakout a really nice intraday retest and we've had this continuation to the upside what we can see now is price is starting to respect the previous structural high we have wick rejections we have indecision candles we have bullish closures my big question to you right now is this can we execute this trade what i want you to think about while making this decision is this the sentiment the market is bullish prices broken above this structural high for the first time in a long time we have really strong bullish engulfing candles here to uh help illustrate or identify volume and momentum we also have wick rejections to identify depletion embarrass sentiment is it wrong to take this trade if you answered no then you would be correct if you answered yes for different reasons other than the fact that this is not a bad trade and all the signs there for it to go up is there then i'm with you as well there's something that we have to consider when taking trades like this most of you out there are looking to take these trades in anticipation of one thing that the market will continue bullish in the long run over 100 trades 200 500 trades if you trade like this it's not it's not incorrect because in theory if the momentum is going to continue bullish then that's what it would do but what happens in most situations like this is you'll start to see the market pushing your direction and then eventually you'll get stopped out before seeing the market go in your direction now why is this well that's the way structure forms price likes to make push phases it also likes to exhaust to make higher lows before then continuing higher so does this make this a bad trade again no because the signs are there that it can continue bullish and in some instances it will just fly up you'll miss the trade and then we start to you know find ourselves in a cycle of fomo but as a rule of thumb if you want to avoid situations like this there's two things you can do you either wait for price to create an identify mark that the higher low or lower high has been formed and then you look to take the shift above the previous high and or you make sure you place your stop loss in one or two places if you don't identify the higher low then where you're looking to place your stop loss is below a key level and if you have that in the back of your mind every time you plan to take a trade i can assure you traders even though you may not be getting a 2r a 3r or a 5r trade what you will be guaranteeing yourself in most situations and i say that very lightly but are also very adamant about it you will more than likely in most situations guarantee yourself a result now in my mind it's better to make money than it is to lose money and try to make money back do you understand that happens in trading but put yourself in a position where you can almost guarantee yourself a positive result whether you make one thousand ten thousand or a hundred thousand the point is we're all here to make money so the rule of thumb is this have your stop-loss always below what you perceive to be a clearly identified higher low or lower high and or key level it is that simple because when you do even if price pulls back on you and the sentiment of the market is bullish there is a very high chance that it will continue bullish what you don't want to do is try to cheat the markets too often that you find yourself in a position where you get stopped out and then you see the markets go in your direction so was this a bad trade absolutely not again over about 100 trades this probably will prove to be profitable because then you increase your risk toward ratio and when it comes to restore ratio in my in my humble opinion it is the holy grail of trading nothing else but risk to wood ratio and that is the advantage that we have when it comes to the numbers and the probabilities it's that simple so think about it make sure you've got your stop-loss in a safe place below a key level high low lower high to ensure that if you are completely right in the direction you give yourself the highest chance of succeeding and winning that trade let's move on to tip number four so moving on to tip number four here we're taking a look at aussie dollar usd on the one hour time frame so we can see with this structure we have a trendline break here for the first time in a very long time we also have an area in the market where price is broken below the last higher low we create a new lower high a new lower low and now we create a double top pattern here we've mentioned it as a reversal because in theory the structure still hasn't created a new low to identify a structural low low high lower low formation but what we can anticipate here based on the double top pattern is that there's a very high chance price will continue bearish now i think about just the i think it was the second tip we're thinking about here what we have to always be aware of is our majors in the market and if price is respecting those majors then in theory we have to be aware of one thing that is where price can react from so how do we identify this as our major well it may not be our major major because you might be saying well wasn't this your major isn't this your major isn't this your major why is this now your major well i think you can see clearly from this higher low this is the first high low that created this high once price broke above this area of noise made the new structural bullish sentiment and structural high this was the higher low that made this high when price came back to this level we tapped into it twice and we've respected it and we have moved sharply to the upside here we tapped in but we didn't move sharply to the upside so now we know this is an area of interest for buyers with that in the back of our mind my question to you is this can we sell this structure right now if the sentiment of the market hasn't fully reversed can we sell it well look some might argue yes some might argue no but i just want to give you something to think about if you get into a reversal phase at the earliest sign with enough confluence and evidence guess what's going to happen you're going to find yourself in some really good trades now i'm not talking about being the guy or the girl that guesses where the reversal is going to happen i'm talking about identifying clearly that we have a trendline break that we have a double top pattern we have three hours of bearish movement to the downside with strong volume and momentum and we've also identified well we know price can come back to before it reacts from why not take the trade we have the confluences we have the evidence we have the confirmation if we're right guess what we're going to make a lot of money and if we're wrong we take a loss it's part of trading but we're also not silly or we're not going to disregard should i say that that price can react from here so as much as we'd like to be the person that gets into a one to five richer would ratio trade because it's going to come all the way back here for some reason we're still happy to settle for let's say a 2r trade so let's see what happens we take the trade we smash take profit now look as price comes back into this key level we have a reaction a very aggressive reaction this is normal does this mean price can't continue down of course it can but should we be the guy or girl that anticipates that it's going to continue down without confirmation no because in theory until price does this then the sentiment the market is still what is still bullish and how do we know that again what we want to be making sure that we're focusing on here is what is happening on our higher time frames as you can see the trend in the market is bullish if we remove this black line we remove what i said about a trendline break and we get rid of the double top reversal and the new low low one new lower low low high trend line what do we have we have a bullish structure market with the last higher low price respected and prices tapping into so was this trade a bad trade if the sentiment and structure of the market is bullish no it wasn't because we were fully aware that price can come back to the last higher low in the higher time frame up trend and respect it so we were satisfied with a one to two trade so what happens in a scenario like this well let's go back to the hourly time frame we take profit on this one we know now that we've taken this trade in a bi-biased trend on the 4-h time frame but it doesn't make it a bad trade because we had the confluences there that lined up to take the trade so we take our profit so my big question to you is this can we buy this market structure now knowing what we know on the 4-h time frame if we've just taken cells well of course we can because now what we're starting to see in this market structure is that price is respecting the 4h higher low price is failing to break this structure and now we're starting to see signs of bullish behavior we're taking a trade at a major key level in the market where we can talk our stop-loss behind the last low if price starts to break the structure then guess what in theory we are royally wrong but if we take this trade in theory it's completely fine to do so why because the higher time frames illustrate that the trend in the market is up we also see strong bearish depletion we see bullish momentum and that now wants us to take this trade and as you can see here we eventually hit take profit but again notice in the scenario that we're not going to try and run for the home run here because we know that price can react to the key level so in order to go for that home run you either lock this in a break even or you wait for the shift which is this ranging market to change from being in an arranged now because we have one tap two tap one tap two taps in the sequence because this is disregarded as previous behavior and what we wait for is the break retest and then we look to get in a trade because now we have a continuation of an intraday trend we would then also have a break from a higher time frame perspective which is a new shift in momentum and then then to anticipate a new higher high balance your greed factor no trade is a bad trade there are ways to take trades and manage trades but balance your greed factor home runs will come when you are not expecting them but don't run for glory every single time because you find yourself in big trouble either losing your trades giving back profits and or just finding yourself as i like to call it in a cycle of doom where you're just playing the guessing game let's move on to our fifth and final tip for our fifth and final tip here today we're going to be looking at pound dualistic on the one minute time frame now this is called a deep pullback trade into a level in the market where price has created a very strong shift either to the downside or to the upside now why is this level important well there's going to be many theories out there and i'm not discounting them but most will say these are liquidity areas these are where the orders are sitting this is where institutions are looking to trap retail traders and whatever else those theories are again i'm not arguing that somebody may not be right but what i'm saying is when you keep it simple and you follow the process that we've already understood up until now with those last four tips you find yourself or you position yourself in a much better place to find that consistency and profitability that you're looking for because if you notice we haven't spoken much about anything complicated other than common sense and identifying how structure moves so the big question here on this final example is this is this a bad trade in my humble opinion based on the fact that we know this is where the market had a very sharp reaction from before we have strong bullish momentum coming back into this level here that is now being created as a deep pullback and we have a strong bearish candle to the downside i don't think this is a bad trade at all now if we take this trade and we're correct that the market will react from this level based on past history which is this behavior here there's a very high chance that price can now correct this movement to the upside back to the downside now please understand something we're on the one minute time frame here so we're only taking advantage of moves based on a single 30 minute candle and or a single one hour candle and or a single four hour candle so we're not asking for much to happen other than for a candle to move in our direction please understand that so if we take this trade look at our risk to reward pretty decent what we are doing though is we're going against the current behavior we are putting our hopes i guess or our idea uh trade an idea based on the reaction that we've seen happen before in the past which is the sharp movement down we have confluences to validate this trade so let's take it because if we're right we're going to make some serious money here and as you see we have a reaction and we have a continuation of that reaction now the problem is is traders are going to be completely satisfied with this move because they was not incorrect that the market cannot reaction react from this move here when the market starts to push bearish you start to build hopes and you get really wrapped up in the idea that you're now gonna hear a one to four trade and if you do then you're going to be so much closer to your goals you're going to make x amount of money you're going to be able to do so much more and you found the holy grail and blah blah blah blah what eventually happens in the long run is you find yourself in situations like this when taking these trades now this is fine of course because we were completely right that price can react from this level and we now accept that the market has stopped us out so it wasn't a bad trade it just didn't work in our favor what becomes a very big problem here in our traders is when you start to do things like this you start scrolling back to the left and you now try to latch on to anything that you possibly can because you're now discouraged that this trade didn't work out in your favor and you continue to chase the reversal in the market and as you can see we now have a reaction from this key level and now our wish toward ratio increases what happens in this situation is you start to build hopes and dreams again that the market's going to continue in your direction and as it does react from that level you start to get excited what happens you get stopped out now by this stage is almost game over because what you're now doing is you're focusing your attention on what can be a reversal to try and claw back now the 2r that you're down and chase the 5r that could have been so you continue to wait for any sign that you can possibly get from the market to take a trade and then guess what eventually happens you find yourself chasing the markets so we have another bearish close here what do traders do let's remove this level no let's keep that level actually what do traders do they now draw themselves a resistance level stop loss above and they convince themselves that this is most definitely the last high where price is going to reverse from and then they take the trade risk reward ratio increases i can get back my two hour losses here and i can now be up 6r if i win this trade price reacts from this level they hold and hold and hold and hold on hold and eventually what happens you get stopped out now you're down 3r because of one simple thing you had a high probability set up based on previous history you had the behavior to support why you'll be taking a trade you also have a pattern that has a very high probability of winning what you didn't do is what most traders find themselves stuck in forever in their training careers is you didn't accept the loss and walk away you chase the loss and you continue to chase the loss and this is a scenario that most traders find themselves in and the number one reason why they never become consistent and profitable so our first trade was not a bad trade what becomes very bad is the behaviors that come after this and that's the chasing and the seeking to make sure that you can recoup the losses to validate validate that you're a good trader and to make as much profits as you can because now you find yourself in a position that you don't want to be in that simple it's that simple so think about it traders i hope those five tips were of use to you um as far as i'm concerned what i'm sharing with you here now is of the utmost value and all i ask from you guys and ladies is just to hit that like button for me subscribe if you're new to the channel turn on notifications when i next post a video and i just want to continue to say that you will continue to trust the process

Channel: RockzFX Academy

Views: 42,627

Keywords: rules, every, trader, must, follow, 5 rules every trader must folllow, trading plan forex, trading plan step by step, trading rules, trading rules strategies for success, trading rules in stock market, forex platform for beginners, forex rules, forex rules based strategy, rockzfx, rockfx, discipline, patience, motivation, hardworking, smartworking, smart concepts

Id: _wDb6-JwBk8

Length: 37min 34sec (2254 seconds)

Published: Fri Oct 29 2021