The One Skill That Separates Losing Traders from the Pros

What's good guys? Wanted to make a quick video today. Just talking about the one thing, if you have it. No, there's absolutely zero doubt that you are going to be successful as a trader. You don't have it. Everything that you do as a trader is going to be an uphill battle. Like you can still achieve some sort of success. But again, this is going to be very tough and you may as well put this into place so that everything you do from this point onwards feels easy and you're actually much more likely to achieve the result rather than again, why go through all of this difficulty for no reason? And so this one thing that, you know, really separates a seasoned, you know, profitable trader versus the average beginner is one word. Definitions. So what do I mean by this? Essentially, the financial markets or you know, trading in general is a very chaotic environment, right? At any given time you have a whole load of variables that you need to deal with. Just as an example, let me list a few, right? First you have your macro stuff, you know, how's the interest rates looking? Like cpi, pmi, whatever. You have price action, okay, what's happening on the higher time frame, lower time frame, middle time frame. And then you can't just look at one chart in isolation, right? Let's say if you look at Bitcoin, you need to look at Bitcoin dominance, you need to look at the dollar index. And again, there's so many variables that you're dealing with at any given time. And the truth is you're never ever going to be able to keep track of everything. Not even the most advanced AI computers is able to, you know, really keep track of this. And the proof is like just take a look at, you know, the Wall street hedge funds or any of the multi decade, you know, $100 million, you know, fund managers or whatever, they are literally hundred hiring the brightest talents from Harvard, from Oxford or whatever to, you know, to trade for them, right? These are people trained in mathematics, on neoprogramming, quants, AI. And these are all people that are the top of the world in terms of, you know, AI knowledge, right? Programming knowledge, machine learning, mathematics and all of this stuff. So they have this huge pool of talent, plus probably, you know, full time quant developers just working on developing new algorithms. And then they probably also have a whole lot of money, right? And connections and insider information. And the whole purpose of having this entire, you know, array of tools at their disposal is one thing and one thing only, which is to keep track of all of the information out there in the world so that they're always prepared for if anything changes. And even they struggle to keep track of everything. Even they are caught off guard by Black Swan events. Now, the truth is, with all of these variables out there that you need to keep track of, it results in one thing, chaos. And that sums up the financial markets. When you are dealing with anything related to the financial markets, right, it's chaos. At any given moment, every second there's some new piece of news coming out, there's something else happening. This chart is taking off this meme coin is the next hundred x investment, whatever, right? The key thing here is that there is always something out there that is going to pull your attention out and just drive it in all sorts of different directions. That I argue is the key reason why most people are not able to make it in the markets. That's just too much to deal with. But there is a solution and that solution comes down to definitions. When there is so much chaos in the world, the only way that you're going to be able to make anything out of it is try to create order. And based on my experience and of course working with my students as well, the most effective way for us retail traders, right, the average Joe, to achieve some kind of order within all of this chaos is through clearly defining everything that could possibly be defined inside a trading system. Anything that you do not clearly define means that you're leaving it up to chance, right? You're leaving it up to your feelings in the moment, your. The information that you have at the moment, right? Let me paint a picture. It could be as something now. It could be something as simple as, let's say with revenge trading. All right, why do most people revenge trade, right? You could name a whole load of different reasons as to why they would do so, right? It, oh, it's emotional, it's be. It's due to like, you know, lack of discipline. It's due to. Due to they are just absolute rookies or whatever. But for me, it just boils down to one thing, which is you did not define clearly what is the process for dealing with losses. As an example, for me, I have just two simple rules. If I lose the first trade, I am only ever going to enter a second trade if and only if all of my entry criteria are met. And as long as it's met, then I have no hesitation and I'm going to go right in. That's rule number one. Rule number two is if I take two losses in a row for the day, no matter what, I don't care if the setup looks perfect or whatever, I'm done for the day. If I take two losses, I'm not. And so just clearly defining these two rules has saved me from revenge trading for I don't even know how long anymore. Like, it's been a. It's been at least a solid year and a half, maybe two years, since I have had to deal with, like, revenge. The notion of revenge trading doesn't even pop up in my mind anymore because I have defined this process in my trading. And so how does that reflect. And so how can you also take this concept and apply it into your own trading? Well, it starts with focusing on. Well, let's try to define the bigger things first, because maybe you don't. Maybe revenge trading isn't the biggest problem that you're dealing with. Maybe it's just the lack of consistency or that you just don't know what you're doing. Right. So let's start with that. With your trading system, there are a few things that you can define. Right? One, how does a good setup look like? And not just a good setup. Right. How would you define an A plus setup, an A setup, and a B setup? So let's paint a picture of how this would look like. Right? Let's say you have a list of criteria. Right? Criteria number one is that you're only going to trade after a liquidity sweep. All right? You're never going to trade if there is no liquidity sweep. All right? Boom. That's clearly fine, right? Unambiguous. That statement right there. It's either that price is on the way to a liquidity level or. Or it's already taken out a liquidity level. Right? There's no in between. That's what I mean by clearly defining this process. And let's say the second item on the checklist is that you need time frame alignment. For example, your daily chart has to be pointing up, your middle time frame has to be pointing up, and your lower time frame has to be pointing up for you to consider taking that trade as a bullish trade. Right. Again, there's no room for hesitation here. Right. It's either all three of these time frames are aligned or they're not. And if they're not, that item on the checklist is an X. So feel free to fill this out based on, you know, whatever criteria that you're using. I'm just sharing kind of a couple that I use within the framework that, that I trade. And like, for example, if, let's say you're using Indicators it could be as simple as for shorts, the RSI has to be above 80 and for longs the RSI has to be below 20. And if that rule is not met, you do not enter, right? And it sounds really simple in theory, just like, you know, clearly defining these. But most of the time you have to realize this. A lot of the things that we do as humans is almost like autopilot, right? It's subconscious programming. For example, when we start trading, because we have never clearly defined this, we just act on autopilot. And guess what? When we act on autopilot, we're using human instincts to trade. And that's not a profitable winning strategy. So the moment you start to define these things, you're already aware of it, right? You now become self aware. And most of the time simply becoming self aware of these things will solve like 80% of your problems. And so you want to really do this process, right? Anything that can be defined within your trading, the entire trading process, right? From your emotions to psychology to your entry, to your exit, to the way that you structure your morning routine or the way that you structure your daily, how your day looks like, right? What exactly what charts you're going to look at. For example, it's not enough to just say, okay, I'm going to look through 10 charts. It's much better to say, or rather to set a rule that okay, every single day I'm going to look through exactly, eurusd, nasdaq, Bitcoin, Ethereum and Solana. And so that's a non negotiable rule. And most importantly, this is clear when you say every day I'm going to look at five different setups, guess what's going to happen, right? You're going to look at all sorts of random stuff and in fact, some days you're not even going to do anything because just that little like unknown factor, right? Oh man, I don't even know what I'm supposed to look at today. Just that alone, right? When you don't have full clarity, you would rather just choose to procrastinate or just not do anything at all. Because that's how the human brain works. When you don't clearly define what it is that you need to do, that's an added step. Right now you need to think and your brain does not like to exert effort on things that it does not deem necessary. And so you're just going to do something else. So now you're seeing how the power of this applies much further than trading, right? It could be applied to life as well, to fitness, to your relationships. Right. How do you, how do you keep a good relationship going? Ideally, you want to be taking your partner out on a date, let's say once a week, maybe once a month. But if you never ever define this, then you guess what, like us guys, we're probably going to forget about it. We, you know, we're going to do our thing, we're going to work, we're going to be busy hanging out with the boys or whatever and we're going to forget about it. But all it takes is one simple definition of what it is you need to do to almost solve this problem completely. And again, going back to what I was saying earlier with trading, this is a very chaotic environment. The less things that you have clearly defined out there, the more you are going to just leave it up to chance, to leave it up to the chaos to pull you in whatever direction it wants to pull you in. And let me tell you, like, it's, this is not just nine times out of 10, 10 times out of 10, if you just leave it up to the markets to do to just direct you, it's not, you're not going to end up in a good place. And so if you've ever dealt with just a lot of inconsistency and like, you know, one day's up, one day your account's down, or yeah, just don't have any sort of predictable process. Just start defining things. It could be as simple as, all right, what do you do when like even your post trade setup, that even your post trade routine, right, okay, after I finish taking a trade, I'm going to take five minutes, I'm going to do one minute of breathwork. Like, the more clearly you can define this stuff, trust me, because now that you have it on paper, your brain no longer has to think. You just follow. And that's what most people mean when they say, oh yeah, just trade your system or just be a robot. Being a robot does not involve removing all of your emotions. Being a robot involves much more. Like, robots are programmed on a set of rules. The way you can trade like a robot is have that set of rules. Anyways, just wanted to get this off my chest today. This is the most valuable thing that I've done so far across my entire trading career. And it's something that just gives me full freedom to like every day I don't eat. Like, my training process is so streamlined now that I really do not exert much mental effort and I don't have to wake up and think. And when I go onto a chart, I know exactly what I'm looking for. Like, just to give you an idea, I finish all of my chart prep work within, like, 15 minutes, 10 minutes, most of the time, and I just move on with the rest of my day. When my alerts get hit, I just come onto the chart, okay, is my entry criteria there or not? If it's not, boom, I move on. And when it's there, I take a trade I set and forget, Go back to dinner, go back to hanging out with friends, go back to smoking a cigar, whatever. And within the next hour, I usually either win or I lose. And so I'm able to achieve all of this in under, like, 30 minutes a day. And it's not because I'm more talented. And you. It's not because I'm more of a genius than you. I don't have a higher IQ than you. It really just boils down to the fact that I have all of my processes clearly defined. And so, yeah, literally just executing a checklist, basically. Right? And then just using sop. And that's where you want to get to if you want to take the next step when it comes to trading. Again, if you have clear definitions, there is very little chance that you're not going to make it. But if you don't have these definitions, I'm sure you can see now, after watching to this point, how almost everything you do can be feeling like an uphill battle. But anyways, see you guys in the next video. But otherwise, ciao, ciao.