i lost money in trading until i understood this

28 Aug 2026 · 1 min

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1:21

In this monologue, the speaker explains why they abandoned conventional pattern‑based trading (such as wedges and triangles) in favor of "smart money" concepts. They argue that pattern trading relies on the false premise that a visual chart pattern guarantees a profitable move, leading to frequent fakeouts and trades that target "relatively equal" highs or lows—conditions that contradict liquidity‑driven market dynamics. The speaker highlights two core flaws: (1) entering trades at levels that lack strong liquidity, which often results in premature stop‑outs, and (2) the inherent tendency of pattern trades to buy at high prices and sell at low prices, violating the basic principle of buying low and selling high. By contrast, smart‑money approaches aim to align with genuine market flow, targeting strong highs or lows where liquidity is concentrated, thereby improving the odds of profitable outcomes.

Chapters

In the last couple of years or so, I have completely switched my strategy to one that revolves around smart money concepts. It's because I realized this strategy over here is fundamentally flawed in the sense where it doesn't trade in line with how markets actually move. This comes from the assumption that, okay, just because it's a pattern and somebody on YouTube said that a pattern works, we're gonna trust, you know, whatever that YouTuber is saying and we can trade it and we can trust our money with it. But the reality is, if you have seen this before, where on a, you know, wedge pattern or like a triangle pattern, you'll notice even if you enter, You end up getting into a lot of fakeouts. You're either going to be doing two things: one is you're going to be trading into relatively equal highs or lows. Like I want you to imagine here, right? If you end up going short, guess what? You have relatively equal highs, right? Big pull that could just get stopped out before price dumps. Or B, if you end up going long, same thing here: you have relatively equal lows. So that's the first one. You're always going to be trading into relatively equal levels, which we've already established is completely against liquidity concepts. And if your goal is to make money, you want to be trading into strong highs or lows rather than relatively equal highs or lows. Now the second thing is, even if you do get a successful trade out of it, what you are fundamentally doing is that you are buying high. I don't know about you, but I'm pretty sure if you ask most people what is the correct way to make money in the markets, they would say something along the lines of you buy low and you sell high, or you sell high and you buy low, not the other way around. And you're starting to see how fundamentally flawed this kind of strategy is.