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In today’s episode, you’ll discover the way I learned to trade the markets and how you can apply it to your own trading.
So listen to it right now…
Resources
Trend Following Trading Strategy Guide
The Price Action Trading Strategy Guide
How to Backtest a Trading Strategy Even if You Don’t Know Coding
Transcript
Hey, hey what’s up my friend?
So in today’s episode, I want to talk about how I learned to trade.
I started trading back in the 2009 period, just after the financial crisis when I got my feet wet in the financial markets.
The way I learned how to trade is mainly through books, forums and blogs.
I was learning as much as I could get my hands on, especially on those free resources. At that point in time, I didn’t really have a lot of money to spend so I tried to learn all I can from all the free stuff out there. Those were my stepping stones.
Lesson learnt #1 – Back the trading by logic
The first thing I learned is, trading must be backed by logic.
This breakthrough came when I was trading the financial markets and I caught one very big move on oil and USD/JPY.
I think USD/JPY was like a 1 to 50 R for that trade. A 1 to 50 risk to reward ratio and oil was about 1 to 40 risk to reward ratio.
That was like a huge “Aha” moment for me because those 2 trades alone more than cover up all the losses that I had for the past few months and even put me way in the green.
That to me was one of my big breakthroughs.
It was when I realised, “Man, this stuff really works!”
It’s based on logic:
When you ride the trends, you don’t take profits too early.
This is how you catch a big wave.
You’ll encounter many small losses along the way. But if you attempt to ride the trend, it’s a matter of time, before you catch something big.
So that was one of my first breakthroughs:
Trading must be based on certain logic, not just based on a couple of lines crossing up and down some mystical chart pattern or whatsoever.
To me, those are the kinds of stuff that I didn’t find any success with.
Lesson learnt #2 – Understand the meta-game
The second breakthrough was understanding the meta-game.
I learned quite a bit about this from this trader called Lance Beggs (from yourtradingcoach.com).
He talks a lot about price action, understanding the meta-game, understanding what the traders are doing – where they’re buying, where they’re selling, where they’re going to get trapped.
I learned quite a bit from him and that really elevated my price action trading thought process.
When I start to trade, I start to ask myself questions like:
- Where traders might get trapped
- Where will they enter their trades
- If they’re on the sidelines, where they might look to enter the trades
- etc.
That was the second breakthrough I had where I’m starting to understand what other market participants are doing and I can base my actions in the present moment now, in anticipation of their future actions.
This is what I call understanding the meta-game.
Lesson learnt #3 – Use statistics to trade better
The third breakthrough that I had was quantitative trading – using numbers and statistics, to help me make better trading decisions.
This was largely influenced by quantitative traders like Andrea’s Clenow, Nick Radge and Cesar Alvarez.
I learned a lot from them because they’re always sharing their works, their findings and I took those lessons and concepts they’ve shared, and I’ll verify and do the work to find out whether it works or not.
That took my trading to the next level because now I have numbers and statistics to back up my own trading decisions.
You can use this as a standalone systematic trading strategy, or you can use this to combine with your own discretionary trading to give you better trading results.
I’ll say this is the evolution of my own trading career so far and I’ve had quite a number of breakthroughs along the way.
The biggest thing that I’ve learned is mainly through books, forums and traders’ blogs out there.
In trading, it’s a never-ending journey.
It’s not like I started off with price action trading and I stay with pricing trading all the way.
No, my trading evolves. From trading everything and anything to focusing on price action trading and trend following.
Then learning about systems trading and how it can improve my overall trading results.
Trading to me is a lifelong endeavour, I love it. Hopefully, you’ll trade it in such a way as well.
So with that said, I have come towards the end of today’s episode and I’ll talk to you soon.