15 Years of Brutally Honest Trading Advice in 12 Minutes

Look, I've been in the markets for 15 years now, and in this video I'm just gonna give it to you. It sounds a little bit weird, but I promise it's not. But seriously, here's everything I wish I knew when I was early in my journey. I think the best place to start with this is some of the biggest myths that traders believe. I think one of the biggest ones has got to be the amount of nonsense that is spouted about there being some sort of secret institutional method. You see it all over YouTube, you see it all over X, you see it all over Instagram. And I literally have to tell you, there is not. There are varying degrees of complexity that certain participants might use, which is based on the amount of infrastructure they have, the talent they have, perhaps the amount of data they can collect and then also clean up. But there is no secret institutional method based off of market makers or hedge funds doing anything really that differently to anyone else. They just have more expertise and more capability of fulfilling certain strategies, obviously, as well as having investors on board so that they can trade a hell of a lot more money than you or I. Now, the second one really has to be all of these signal services that you see. They are an affiliate scheme. So someone will suggest to take my trades after you have joined the brokerage under their link. They will then have you trade a certain amount of volume and collect an affiliate payment. This is obviously a ridiculous concept because if they actually had a strategy that worked, it would stop working after a certain time because so many people are actually fulfilling the same orders. Many seem to also think that purely just using price action and that's it is like the best way to do things because it's just pure. It's almost like they wear it as a badge of honor when in actual fact it's really understanding what the market is and what you're actually trying to accomplish with investing or trading that is key. And there's two different ways in which I like to differentiate this, which I will come on to further on in this video, but they are absolutely important and might actually unlock a bit of a light bulb moment for you. Now, conversely, the number one thing that I really don't think people understand enough is the element of muscle memory that goes into investing and trading. When you end up doing something so much, sometimes you can't even measure as to why something works. But it's because of your subconscious. It's because you've done something for so many times that innately you sort of just get a gut feel for whether a market's going to change, whether a market's going to start taking off. And these things are so, so important, I think, cannot be learned from a very base level. Now I'm going to run through some of the really hard lessons that I personally have learned over the last 15 years. The first thing is my risk management. Risk management to me meant setting a stop loss at a certain price just because of what the market looked like. That is completely not how I do things now. What I look at now is objective components of volatility. By using volatility and objectifying your risk management, you can keep it far more consistent over time, which is much more measurable. So now, for instance, I might use an ATR to measure a volatility stop, or I might adjust volatility based on straddle pricing from the options market. You can imply a daily expected move or a weekly expected move or even a monthly expected move, which then lets you put your risk management in a place where data is actually backing the view and not just your perceptions, which we know can be wrong very, very often. I'll give you an example of a horror story from back in 2015 that happened to me. So usually I really only trade the majors, and rarely would I touch the Swiss franc. However, I was long dollar Swiss at the time. And if you're new to trading or investing or the markets and you don't know what happened in 2015, go and look at January 15th, 2015. It is possibly one of the biggest daily market moves that has ever happened. I think it was about 10 sigma of a move. So it was 10 standard deviations. This was when the Swiss National Bank depegged the Swiss franc from the euro. On that day, my account balance went negative since I was long the dollar, short the Swiss franc, and this was a disaster. I was panicking so, so much. Luckily, my broker allowed me to just zero off, so I didn't actually owe anything. However, for many people, this actually ended up having them to pay the broker because their balance was negative. Now, what did this teach me? Well, it taught me just to not stray too far from what you already know is working. I rarely traded the Swiss franc, and I probably had no business touching Dollar Swiss at the time. And so what this can be translated into is, at the very, very beginning, if you do manage to find something that works that you're able to test, don't then go and rapid-fire across all other markets. Stick with that one or two different markets. So in short, just don't stray too far away from what you know and what you know is working. It makes no sense because things behave differently. You are best sticking with a certain asset class or a certain couple of pairs if you are trading currencies, which I really, really do not suggest you do anymore. But basically, don't stray. Just wanted to give a big shout out to our sponsor Tickmill. Now, if you don't know about Tickmill, they are one of the longest-running FX, CFD, and futures and options brokerages in the industry, run by two brothers, and they've been doing this for such a long time, and I tend to only work with people who I know are of good nature, good quality, and have a fantastic product. I've known about Tickmill for the last probably 10, 15 years when I was at TradingView, various brokerages, and they've always been around as one of the firms that have a fantastic reputation. Now they offer FX, futures, options, CFDs on over 6 600 different assets, and I think that is testament to the extent to which they want to cater towards traders who want to go a little bit varied across different asset classes. Now, I'm predominantly US stocks focused. However, sometimes I still have a punt around in FX. I'm just not going to go and tell you guys to do it because I don't think it's necessary for every retail trader. However, we're all going to go and have a punt, so why why not do it with a firm who is absolutely excellent and who will go above and beyond to fit you as a customer into their company? Click below to sign up with Tickmill if you want best-in-class execution. Here are some core principles that actually work. Now, at the very start of the video, I mentioned there were two different components to sort of separate the markets out into in terms of how you should trade. Many traders separate themselves out into the first component where they're looking to Always, always understand inefficiencies and exploit them. This is actually really, really difficult to do. This might be a mispriced option, or it might be something that occurs in the flow of a specific asset at a certain time, or it might be statistical arbitrage. It might be latency arbitrage. All of these things are different inefficiencies. These take serious, serious time and effort to understand, and it is in fact what most traders, even retail traders are thinking they're doing when in actual fact they're not. Again, if you go on YouTube and you look at all of these people providing day trading strategies, this is pure bollocks. Because at the end of the day, if that strategy worked, it would have been arbitrage away a long, long time ago by a certain algorithm. Because these hedge funds and asset managers are far, far better at understanding data, cleaning it up, and then creating a strategy from that. So the alternative is something called risk premium. Now what does this mean? It effectively means that, you know, there are certain things in the market that might consistently make money from a foundational level. For instance, we know that over time the S&P 500 tends to go up. If you know this, you can do very, very simple things such as looking at a moving average to actually be able to understand where it might move faster and where it might be slowing down, which creates a bit of a risk management strategy. It's exactly what I do. I use very, very simple principles based on risk premium and not the real arduous work of trying to consistently find inefficiencies in the market, which is also known as alpha capture. Now, coming from a longer-term perspective, my view is always that being more patient with good systemized risk management absolutely beats overtrading. Lots of people tend to want really, really high turnover, and I never understand why. So you might see Bitcoiners, for instance, they might be trading Bitcoin Bitcoin perpetual futures. And I always say to myself, why don't you just hold Bitcoin rather than putting yourself through all of that pain of day trading? And I'm sure you've seen many, many stories of this, or it's happened to you as well, whereby the anxiety of consistently being in front of your computer is just not worth the time. The third principle I really, really need you to understand is that you are going to get most of your P&L from 1 or 2 core positions a year. Why is this? Well, if you've heard of the Pareto principle, it means that 80% of outputs come from about 20% of inputs. And once you're comfortable with this fact, it lets you then understand that once you do see a position rising more than others, that you can focus more attention on that core position. Because at the end of the year, it is likely that core position is going to make you more money than most of the other positions probably put together. Right now we have a position on Robinhood that we've been running since February 2024, which is up over 230%, which is 100% making a hell of a lot of our P&L over the last 2 years. So if you're one of these people that really, really likes to trade, think about why you like to do that. Are you doing it because you think it's going to give you optimal gains? It's not. Are you doing it because you actually have a gambling mentality and don't know what you're doing. That's probably what it is. And so if that is you, have a look below and check out the assessment for our Academy, because we could probably help you systemize idea generation, risk management, and also trade management to make sure that you're absolutely getting the most out of your portfolio. We aren't traders, we're investors, and we're trying to turn gamblers into professional investors as well. Now, if I could start again, here is exactly what I would do. I would try to remove my desire to find inefficiencies in the market, whether it's based off of price action, whether it's based off of data, whether it's based off of whatever else, it doesn't matter. And I would focus on the second principle that I mentioned, which is looking at risk premium, starting my research from a few loose facts that I understand make money. One, US markets tend to go up over time. Two, momentum has been the best factor over the last 30 years in terms of annualized returns, which means that you're going to make more money. Third, making sure that I never use a price target or a take profit. That is absolutely key. And I'll get onto this in a little bit. The way in which I do things now is I only focus on the US. I have 4 moving averages to determine trend and momentum, and I also only look at companies with a quality balance sheet over a market cap of $10 billion. This makes sure I'm looking at the mid top end of the US market. This creates a far, far better positioning for my allocations because I know I'm not looking at dogshit. I know I'm not looking at stuff that's going to drop 50, 60% in a day or something. I'm looking at companies that have already created a precedent of being able to build themselves up to being a $10 billion company. Whenever you're looking at penny stocks, you are taking a pure speculative of punt and you do not know what is coming around the corner. The CEO might go and sell a load of shares the next day, or one of the trials of a biotech penny stock might in fact just collapse. You do not know. Whereas with the bigger companies, they have a quality balance sheet, they're more likely to have a sustainable business, and so they are more likely to have their share price increase. It's very, very simple. And the easy way to find out if a company has a quality balance sheet is if it's got a positive price-to-earnings ratio. That's it. If we take a look at Oklo at the moment, they have a negative P/E ratio, except their stock price has gone absolutely bananas. I would be very, very cautious about this company purely because the speculative nature currently is way too crazy. I don't mind bubbles if it's in companies that actually make money, but in companies that are not making any money and the market is forecasting their returns maybe 10 years ahead, that is a bit crazy. When the stock does increase by so much in such a short amount of time. So in short, what we're looking to do is focus on momentum and trend as a factor. We're looking to focus on the largest country in the world with the biggest companies in the world in it, in the United States. And then we are looking at quality companies within that country to buy because they are exhibiting momentum features. Now I'm going to give you the brutal truths. Really, really simply. Brutal truth number 1: most of you will not make it because you don't understand the task at hand. I'm sorry if that is offensive. It is absolutely true. Pay attention to what I said with regards to inefficiencies versus risk premium. Brutal truth number 2: the market doesn't care about you, your feelings, or your goals. Stop playing victim and just do better. Brutal truth number 3: if you want excitement, you've got to go to the casino. If you want to make money, you need to find investing and trading so, so boring. That's 15 years of brutally honest advice. So you can take it or leave it. It's completely up to you.