hey my friend welcome to this edition of the top dog treating video for youtube
and well anywhere else this might occur so today we're going to talk about real
life trading and what expectations you should have because it's very very
important we import a thunk day that you have realistic expectations otherwise
well you're doomed to be losing in your trading I want you to be a profitable
trader so the first thing we have to do is step one set up a realistic
expectations and one of the expectations that I find that people are unrealistic
about is they will think that they should be able to find some way to catch
every swing high or low so they say oh how would I have known to go short here
how would I have known to go along there how would I have known to go short there
how would I have known to go long there how would I have known to go short here
ok so that is ridiculous you will never know how to find in advance every move
in the market every swing high and low doesn't happen nobody can do it I can't
do it you can't do it Warren Buffett can't do it well God can do it but God's
not telling anyone how to do it so anyway if you think you can do that then
I want you to say hi to the Easter Bunny and the Tooth Fairy in Santa Claus for
me because that's the planet you live on alright they all live on that planet so
say hi to them for me alright all teasing aside what real trading comes
down to in real life is about finding probability situations which by the way
is not even close to finding every single move in the market and one of the
side effects of this almost disease which is a dis is where people come
uncomfortable with trading is a fear of missing out they think if the market
makes a big move and they didn't catch it then you know dang
I should have been able to catch that then they'll go back and they'll try to
review the situation and try to figure out okay how could I have known that
this was the low and that I should have bought that puppy and the trouble with
that is that we can become very good at figuring out ways using our imagination
to note some patterns there and say hey okay this is how you could have known
except for one problem yeah that might have been the situation on that
particular move but that has nothing to do with every move in the future so in
trading there are no certainties that's one of the problems that's one of the
psychological challenges and trading is that human beings myself included I love
certainty and most of us do we are actually wired for certainty for
Security's part of our survival instinct nothing wrong with that actually it's a
good thing but when it comes to trading and again this is what makes trading
somewhat unnatural and therefore difficult is that there is no certainty
there are only probabilities and so even when we do have a high probability
scenario they don't all work out well otherwise of course by definition we
would have a certainty so that's why risk management and money management
come into play is so that during those times when the probability doesn't work
out let's say you've got a 60% probability so over a large sample of
data yeah that's gonna work out for you but 40% of the time it's not so
therefore you might have impeccable risk management and impeccable risk
management money management because those two things well those are really
what real traders live and die by that's what it's about
now amateurs tend to look for the magic indicator or this or the magic price
pattern or that or some geometry pattern and those things can be fine actually
they are good but they're not magical they're mathematical but they're not
magical and so the fact that they're mathematical equations is exactly what
can allow them to help us have any probability scenario as long as in our
mind we recognize that that's all it is and
it's going to occur over a large sample of data not every swing high and every
swing low and to bring that even into more reality you've got to understand
that all kinds of stuff happens in the market so even if you recognize a
pattern that maybe works six seven eight times out of ten based on history all
right a lot of people are into back testing okay well that's great
but hindsight's 20/20 and that's still what that is back testing is still
hindsight so when I come into the future okay you get that same pattern whether
to price powder an indicator pattern whatever Fibonacci levels etc what's
gonna happen this time in other words what the past does not tell me is well
is there going to be gossip that comes across the wires at the time I take that
powder and it's there gonna be some news or rumors doesn't even have to be real
news right could be fake news and I mean seriously it could just be some rumor
that comes across the wires that isn't even true but it will affect the market
at the moment you take the trade and that stuff there's no indicator you know
there's no rumor indicator that's going to tell you that the rumor is going to
happen in five minutes from now there is no gossip indicator and now
there's news of course and so we definitely want to look at the
pre-scheduled news but even with that how's the market going to respond to
that news number one you don't know what the news is going to actually be and
sometimes ironically the market will move up on bad news and or move down
when the news is good it's just not good enough or it's really good but
expectations were really high and so you look at the expectations numbers and
sometimes those are Matt or even exceed it and the market still moves down so
all that stuff you know it's very unpredictable so can put the outs on
your side but again that's why you must must absolutely master money management
and risk management here's another little tip for you and that is that
let's look at this okay so we've looked at these highs and lows here so let me
take these off and let's just look at one and finish up our video with this
one so I got a lot of people who say oh you know indicators are all lagging and
price action is the only thing that is predictive mmm okay everything's legging
everything is legging so for example if we take the hard right edge of the
screen right here all right we've got a very nice I mean that's just a common
engulfing pattern and you know very obvious one a lot of people notice that
see that and therefore say okay that looks like a very high probability cycle
high or swing high so I'm going to short that alrighty so very cool so he assured
it and the market goes down a smidge and then it goes up and takes that high out
hmm no bueno no bueno so why didn't that candlestick pattern
work who the heck knows all right heck knows candlestick patterns are
short term patterns here's the point candlestick patterns are short term
patterns that's number one they do not determine trend which is by definition
always long term number two they're not they don't always work even Steve Nissen
who brought them to the West and I love Steve and I I do use candlesticks so I
like candlesticks I'm not dissing them at all I like them very much but they
are only one piece of the puzzle in other words they're one part of the
business plan in isolation and even Steve nests and talks about this they
cannot be used in isolation they must be taken in the context of the entire chart
and I agree with that 1 billion percent so that is very important and that's the
reality of trading so how do we trade the ultimate amps are obviously not
gonna be able to give you you know all the answers here so that you know a 10
minute video where you can go work for Goldman Sachs and become a master trader
low unrealistic but it all comes down to this it all comes down to the supply and
demand not only as a plain demand in the sense of the bids and the asks
and what the sentiment is because bids and ask sentiment supply demand
potential supply and demand those are things that are just like talk right and
we all know talk is cheap actions speak louder than words and the same is true
in trading so what our actions and trading actions are actual buying and
selling the commitment of money at the moment you're taking the trade not 10
years ago or 20 years ago even three weeks ago from back-testing so the way
real trading works is we look at the moment we're taking the trade what is
the pressure of buying and selling in price actions part of that volume is
part of that mathematical functions such as indicator is formulas like that they
can be part of that as long as you really understand what they're measuring
and look to use ones that are measuring the balance of power has that sometimes
called at that time realizing that that can change in a minute and that's where
okay we take our trade based on that there's an imbalance here of actual
commitment of money because when people send their money out into the world
they're serious people are very serious about their money the bids and the asks
that those can be removed at any time but once their money is gone that means
they've really made a commitment then understand things still can change see
because drives you crazy because there's no certainty but that's the world of
trading that's the real world and you've got to learn to deal with that so you
put your stops in your trailing stops of course you position size correctly and
all of that sort of stuff so then what happens happens and you're good with it
because you know based on your testing over a large sample of data you're gonna
be good you're gonna be golden and use money management so that you can
withstand the draw downs as long as your system is tested for a long term
profitability so that's it for today if you like this video if you felt it was
valuable if it helped to bring some reality to trading or you think someone
else and to learn some of these realities please
go ahead and share the video that's one of the best things that you can do of
course is pay things forward also click the like button leave a comment I love
your comments they really really encouraged me to create more free
tutorials for you now finally I'm giving away one of my trading courses and this
is a great trading course it's an actual course of five short videos and in this
course it's not just theory but I'm actually going to give you one of my
favorite trade strategies in there so I'm giving you something very very
practical you can go and will hopefully make money trade it on a demo account or
simulator obviously first it's called the rubberband trade and this course
will give you the rubberband trade entries exits stops all that stuff all
the details are very specific absolutely free and I'm going to give that as my
gift to you just click on the link in the top right hand corner of this video
and I will get that over to you immediately
you