Biggest Mistake Losing Traders Make [How to Fix it]

Biggest Mistake Losing Traders Make [How to Fix it]

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- Most traders try to do as much as they can when the market is open. But here's a little secret, right? That's not the difference maker. Professional traders are determined based on the work that they do when nobody's watching. The trade reviews that are conducted and done after the market is closed. So today's video, I'm gonna show you how to conduct a trade review properly.

So you know that your trading plan has that statistical edge that can actually work. So today's video we're going to go over how to conduct a trade review properly, how to review your trades properly and how to create a statistical probability edge based trading system. Stay tuned. (dramatic music) How to conduct a proper trade review.

Let's dive straight into it. There's two crucial questions we need to ask ourselves first, right? And you have to check to see if your past trades are an accurate reflection of what you intended to do as per your trading plan. Number two, is your trading plan actually effective.

Now note, you cannot answer the second question without first answering that first question. And none of this can happen and no improvement can be made if you do not even have a detailed written trading plan upon which every single trade you take is based, right? So before I dive into that, I wanna touch upon that a little bit. You know, as traders we have that bias, that everything we do is great, right? And if you are already doing more than this, like you have your spreadsheet, you have the journals that's okay. But if you're not doing any of these things, you're not tracking your trades and you just simply glance at them, that is not okay, right? Glancing at your trades when they're done with it it's not okay. Just looking at your trades at the end of the day is not okay. You have to conduct a proper trade review, right? So as traders, we think everything we do is great.

You know, at 09:30 am market opens and I call the monkey brain, the monkey takes over and you're just trying to do all these things. And at the end of the day, the monkey is always gonna say, "Hey, everything is great." That is why we need to conduct a trade review with a clear mind, after we're out of that trade. Usually I like to do within an hour after the market close, right? Do it then with a fresh mind. So you can actually look at it objectively and review your trade. So, first question to ask yourself is, did you follow your plan? And as a trader, as a day trader specifically, this process needs to be done every single day.

You can print the charts or take screenshots of them anytime you want, right? But the review, after that trade needs to be done within an hour of the market close. The reason I say that is because things will come up, right? We're all human. Your phone's gonna ring. You're gonna check social media. Now you start watching YouTube. Now you're on Netflix.

Now you're going out. Your wife asks you for something. Your girlfriend asks you for something. Maybe you're taking care of your kids and you never actually end up reviewing your trades.

And you lie to yourself. You tell yourself, I'll do it tomorrow. And then tomorrow something else comes up. Now you have a week's worth of trades.

You still have not reviewed. And guess what happens? You're like, you know what, let me just start over again. From today I'll start reviewing my trades and this whole process repeat itself. So the way to avoid that is to conduct that trade review within an hour of the market close. Now, as a swing trader, you should review your trades every time your shares are sold at either your target or your STOP LOSS. Whenever you get out of the trade, you should review that trade.

Now, this process for a new trader should start the moment you take your first paper trade and continue this process, right? Either until you are super happy and satisfied with your profitability and the consistency in your trading, right? Or you're not happy with it, right? But you should have that condition that you will start resuming these activities of tracking and journaling, and you know, looking at your trades, conducting a trade review, if you fail to meet your goals, okay? So as a swing trader, you can print out the charts whenever you want, but the trade review should be conducted the moment you sell your shares at either a target or your STOP LOSS. The moment you get out of the trade, you should start tracking. Now for a new trader, this process should start the first time you take your first paper trade and you continue this exercise until let's say, you're happy with your trading. Trading is profitability and consistency.

But have a condition in there that you're gonna resume tracking and journaling and trade reviews, if you fail to meet your goals. Now this is what it would look like. Just simple. You have daily chart on the left. You have a 15 minute chart on the right. Now for me, I have the daily and the 15, because daily is where my bias came for the trade.

And 15 minutes was the pattern that I actually traded on that chart. So for me, it's daily and 15, but maybe you took a one-minute breakout. So then you have daily and that one minute. Whatever the relevant timeframes. Now, if you're a swing trader, if you're a long-term trader, maybe you have the monthly and the weekly or the weekly and the daily or the monthly, weekly, and the daily, right? Or maybe the daily and the 60 minute chart. So for swing trader that you'll have your own timeframes to review.

As a day trader, you will have the timeframe that you took the trade based upon. So print them out, just like this, daily and 15 minute. The next step to conducting that trade review is to write the strategy that you traded, from your trading plan, on the top of these charts, right? And usually I still believe it's best to print the charts, the old fashioned way, like actually print them out and mark them by hand. I mean, that's what I did for the first, like three years of my trading career. And I really think it really, really helped me.

I don't do that anymore because I mean, as I said, I'm happy and I'm with my profitability and I'm content with where I'm at. But I still conduct these trade reviews on an ongoing basis. But instead of actually printing it out, I do it on like Notepad or OneNote, you know, apps like that. But I do believe if you're a new trader, you should at least for a few years, print them out and mark them by hand. So as you can see here, the trade that I took on this stock, ARQQ, was based a 15min Buy setup.

And I wrote down the strategy right on the top, okay? The next step is mark per your trading plan, the perfect entry and exit. So let's say my training plan was to do two hours or nothing to sell all my shares at the two hour target or two to one target, right? So my entries here 21,38, right? Right over here with a stop at 20,28. I mean, this was based on a 15min Buy setup. A strategy that we do teach on a daily Buy setup as well. So 21,30 at 20,28, the ideal entry was this. The exit should have been, as per trading plan exited for 23,58 2r.

And it looks like it went to like 23,61 or something. So you would have got your 2r target, right? That should have been the perfect exit. Now, mark per your trade, the actual entry and exit. What you actually ended up doing, right? Now, you must obviously take into account your trade management plan to properly figure out your exits, right? Maybe you're doing a five minute 90 MA trail.

Maybe you're doing a five minute bar by bar, or maybe you're doing something else, whatever your management is, you write down based upon that. So I wrote down my actual entry and exits here. Obviously I got out partial some at 22.

Some at 22,57, some at 23, along the way. So overall a profitable trade. But again, nothing compared to, if I just took all the shares at 23,58, right? Now next step, determine simply if you followed your plan for that trade. So this case I did not, technically, as an example, did not follow my plan 'cause I should have held all of the shares for 2r.

But instead I got out partially on these pops. So I did not follow my trading plan. So I marked that trade BAD, right? And I want you to really understand that not every profitable trade is a GOOD trade and not every losing trade is a BAD trade that you have to go according to your plan. So if you follow the plan, mark it GOOD. And if you did not follow the plan, mark it BAD.

So in this case, you can see I've marked it BAD. And if you can't even come up with the strategy you traded, like you just bought the stock and you're like, "I don't even know what pattern that is. I don't even know what to call it. It's kind of like a cup and handle, like a Buy setup like a pullback breakout. I mean, now you're just making shit up, right? So if you can't even come up with the entry on the strategy that you used, mark it as UGLY and you do not want to do UGLY, okay? So accumulate all of these charts of all the trades you took throughout the week, right? And again, categorize them, put them in these columns.

So for the GOOD section, save the best two to three examples of each of your strategies, right? There's nothing better for reinforcement of what you should be doing. So say, two to three great examples of the perfect trades, right? And then put them in a binder. Like I used to have these old paper binders, right? Print them out, put them in a binder, or even make them into a slideshow and put it as your desktop wallpaper. So keep seeing great examples of your great trades, right? That's the best reinforcement, okay? Now for the BAD trades, you categorize all the BAD trades by the reason why they were BAD. Why were they BAD? Did you break your trading plan? Did you not follow your trading plan? You got out too soon, you held too late.

You didn't take your stop or whatever the reason might be. Write down the reason why they were BAD, right? And then what you have to do is when you flip through at the end of the week of all the BAD trades, try to find the common theme, try to find the common theme. So for me, for a longest period of time, when I started trading, I did this exercise of GOOD, BAD and UGLY, keeping all my trades. I had a green folder with all my winning trades. I had a red folder with all my losing trades that had a blue folder, right? With all the trades that I should have taken, but I hesitated on it. I never ended up taking them, right? But what I noticed is at the end of like three months of like tracking this, I flipped over the red binder of all my losing trades, and I found out the common theme.

The common theme was, got out too soon, sold it too early. I was a chicken. Sold it too early, got out too soon, got out too soon.

And I noticed, wow, that's the theme of my trading. That's why I'm not making money. So if I just fixed that part of getting out too soon or getting out too early, I could actually be a profitable trader. That was the changing moment for me. So, you have to find out the common theme between your BAD trades. Create a separate document, outlining everything that is needed to be done, to make sure that this one BAD trade concept never happens again, right? Write it down.

And you put punishments in place, enforce punishment, right? If it's not eliminated, so as an example, and Jared, I told this to Jared as well. And I think you guys might've heard it from Jared. So when I was coaching, like a lot of private students back in the day, I had this like really, you know, Catholic guys, super Catholic, like really religious guy, right. And he was like a Trump supporter all the way through, okay. And he was like pro-life and all that stuff that you hear about, right? And I told him, if you break your trading plan, as your coach, if you break your trading plan, you're gonna donate, let's say $100.

Every time you break your trading plan, to planned parenthood. And he was like, "I'm never gonna do that. That's crazy. I'm pro-life, that's the Bible." And he started, he got really angry.

I'm like, "Great, that's what pinches you, right?" That's what you're gonna do, right? If you break your trading plan, every time you don't, you're gonna donate $100 to a cause. So, let's say you're a Republican, you're gonna donate to the Democratic Party, if you break your trading plan. If you're a Democrat, you're gonna donate to Trump, if you break your trading plan, right? Put punishments in place to make you not break training plan, okay? Maybe you're married and hey or you have a girlfriend and you tell her girlfriend, "Every time I break my trading plan, I'm not gonna get any. I'm gonna sleep on the couch."

Whatever pinches you is what you got to do, right? And again, if you have a lot of UGLY trades, stop trading. I'm not joking right now, right? Jokes apart, stop trading, okay? Create a proper real trading plan because you don't have one right now, right? Stop trading, create a real trading plan. And paper trade until you are successful.

and every trade is a genuine trade from your trading plan. It's a genuine concept, genuine strategy. You're not making it up, right? If you have UGLY trades, you're never gonna succeed as a trader. You're gonna fail. I've seen people come and go, and I don't want you that for you, okay? Now the second step obviously cannot be done until the step one is done. You must verify if you're substantially following your plan, otherwise the step is worthless.

Because again, the step I'm gonna give you right now, it's absolutely worthless. if you don't even have a trading plan. 'Cause if you don't have a trading plan, then well, there's nothing to talk about.

So if you don't have a trading plan and you're listening to this video, pause it, make a trading plan, right? Because without this, this is worthless. Now, we're gonna ask ourselves the question. You know, I am following a plan, but how do I know if the plan is a good one, right? That's not always easy to tell that, because well, as I said, good strategies, stop out.

And sometimes bad strategies end up making money, right? So what it is, it's a matter of statistics on your trading, okay? You have to conduct statistics on your trading. You have to track the statistics on your trades and I have multiple videos on that if you haven't seen it. I have a video called, "How to create a profitable trading system." I think I have a, "How to grow a small trading account." Watch all those videos first, I go over that in detail.

But you have to have statistics for your trades, okay? And don't be scared if you are not a computer wizard, or you're not this tech savvy person that you can set up like a database or these spreadsheets. Well, simply just pull out a notepad, pencil and paper, right? Calculator and write it down and do it by hand. It's not that easy, it's not that hard, but this is a business. You have to treat it like a business, okay? Or simply to make it easy just purchase a trading journal. I think live traders, we have a trade tracking spreadsheet as well. It's like 90 bucks for life, right? For life.

Take that, just input all your trades in there. It'll automatically calculate all your statistics. Like wouldn't it be nice to know guys.

Wouldn't it be nice to know from the money that you made, that how much of that money was made on short plays versus long place. How much was made on Monday versus Tuesday, right? For me, I know I'm horrible on Tuesdays. For some reason, I have no idea why, but for some reason I'm not great on a Tuesday, right? How much was money was made on pullbacks versus breakout? Don't you wanna know? Are you a better pullback trader or are you a better breakout trader? Maybe you find out that, hey, on I'm making money on my breakouts, but I'm actually losing on my pullback trades. Wouldn't that be good to know? Wouldn't that be helpful, right? How much money was made when you found your own ideas and own trades versus maybe you're following somebody in a chatroom? Track it, hey, I took on Moe's trades.

This is what I made on Moe's trades. This is what I made on trading Jared's trades. This is what I made on our own trades. Wouldn't it be good to know the source of that trade, right? And how much was made when you trade the first, let's say 30 minutes of the market open versus if you take a trade after 10:00 am. Like for me, if I take a trade between 9:33 am and 9:45 am, that's kind of my sweet spot.

If I usually take a trade after 10:30 am, they usually are not that great. So these are all great things to know, but you're not gonna know that until you start tracking. It's almost like you start a restaurant, you start a business and you don't keep any invoices.

You don't keep a collection of your receipts. You don't keep any record. Like that's no way to run a business, right? Exactly, that is no way to run a business, and trading is a business. So that is not the way to treat it, okay? What percentage of your trades actually go and hit? What was your target? Wouldn't that be good to know? All these things are good to know and they can only happen once you start tracking, okay? Now, I wanna go over another concept, which is called, The Benchmark, right? The benchmark is one of the concepts that came up with a while ago. What it basically means a super simple concept, Benchmark. What it really means is the ideal way of trading.

Also, if you basically know that, if you did everything by the book, and took every single trade that met your trading plan, how would you have done? At the end of each day, write down all the stocks you should have traded. Where the setup meets your trading plan, right? Write down what you should have made on each trade as per your plan. And then another column, write down what you actually did, what you actually end up making. So this is what it's gonna look like. And you should keep a track of this every single day. This is just an example I filled out.

So, let's say you have a column called, BENCHMARK, right? You write down 9/21 and you can literally do this on a notepad if you don't wanna do in a spreadsheet. So let's say I should have really traded Snapchat based on my trading plan, but if I traded it, I would've lost an R. I should've traded QQQ based on my trading plan. If I did trade that it would have hit my target of 3R, right? If I traded Facebook, I would have lost an R. If I trade Apple, I would have lost an R.

And if I traded BABA, I would have gained 3R. So if I did everything, my plan told me to do, total. I would be up 3R for the day.

But what did I actually do? I took Snapchat, I also lost an R, as per my trading plan. In the Qs trade, I got out a little bit earlier. I got out at 2R instead of the plan making 3R. Facebook, I did not even take.

The plan took it, 'cause obviously benchmark is trading everything. So BENCHMARK lost an R, right? Then I traded Apple as well, I lost an R. BENCHMARK, also lost an R.

But on BABA again, I got out a little bit early at 2.2R. The plan made 3R. So now the BENCHMARK made 3R and I made 2.2R. So that means I'm 0.8R behind my BENCHMARK. One day doesn't mean anything.

You have to do this over weeks and months. So now next day, comes Microsoft. The plan made 3R. I didn't even take Microsoft, so I made 0R. Ford motors, the plan made 3R that day.

I also made 3R, I held it. That was great. Apple, I lost an R, I didn't trade Apple that day. So I lost 0R, right? Tesla lost an R and the plan also lost an R. But now notice the difference. The plan ended up making 4R and I only ended up making 2R.

You see that? I only ended up making 2R. So now I'm 2R behind my BENCHMARK. Now, some things to keep in mind. You're never gonna be the BENCHMARK. Where you're never gonna operate 100% of the bank. It's never gonna happen, 'cause you're always gonna miss trade that you should have taken, right? The goal is not to be the BENCHMARK.

The goal is to aspire to be as close as you can to the BENCHMARK. The goal is also not to beat the BENCHMARK. The goal is to be as close as you can do to the BENCHMARK.

So at the end of the week, at the end of the month, you write down you compare these two columns, you see, hey, my plan would have made 100R C if I followed it for six months. I only made 40R. So that does not mean that you're a bad trader, right? I want you to get what I'm trying to say. That does not mean that you're a bad trader. It actually shows that you have a trading system that makes money. If you just follow your trading system, AKA BENCHMARK, you would have made that 100R.

You only made 40? You should actually be, you know, happy with that because, well, the plan actually works. Plan makes money. You just didn't do the plan. You just didn't take those trades. So if you took those trades, that's the true potential of your trading system. So in a way, BENCHMARK means the true potential of your trading system.

I hope I'm not confusing you guys, right? The people in the chat room, you know what I'm talking about, okay? So, if you operate 70% or more, close to the BENCHMARK you will have a great successful trading career. If you operate under 50%, you will struggle as a trader, okay? And if you don't even know what your BENCHMARK is, like, what are you even doing? Are you just gambling? Is this a hobby for you? If you don't even know the true potential of your trading system, why would you follow it? Ask yourself that question. Isn't that crazy? That you're following something that you don't even know what its potential is. So the BENCHMARK is a way to find the potential of your trading plan and for you to operate as close as you can to it, okay? Now, last things before I end it, I wanna say, take your STOP LOSS. Please, it's super important 'cause most traders have mental STOP LOSS, which only will drive you mental, right? 'Cause people think, you know, knowing they know that, hey, I should sell the stock when it does this.

When it breaks out and comes down and takes out the low of the breakout level, I should exit that stock. They know that. But because sometimes the stocks might trigger, pull back and then end up working at the end of the day. But fearing that it is gonna do this, people get caught into this, right? So isn't it better to get out, take your STOP LOSS.

And if it comes back up again, you can always re-enter within a new STOP LOSS. So get out first re-evaluate, 'cause you can always get back in, right? But that's what, this is the biggest reason most traders fail. Because they think, well, you know, I don't wanna stop out, market makers gonna see my stock.

They're gonna shake me out the trades gonna work. And they've had trades in the past that have traumatized them, that trigger stopped and then ended up working that they ended up holding that this is what's gonna happen. And then you get caught into this action.

And this is what ends more trading careers than anything else, not taking your STOP LOSS. So, please do not be a person who's on Jared's, "When will the insanity stop" segment, be the difference? I wanna do a positive segment. So Jared has a segment, "When will the insanity stop", where he talks about all the insanity he's seeing online and the emails he gets. I wanna start a positive segment, right? Please help me start a positive segment. Send me some good stuff, 'cause I wanna say, "Hey, when will this profitability stop? Never", right.

So I wanna positive segment, but again, take your STOP LOSSES is what I wanna conduct. Now I'm quickly just going to show you, kind of like a journal that I have been filling out for the last couple of weeks. So you can see my trading journal and you can see how I collect those statistics and all of that. So let me go into, get my screen share up. All right, so here's a glance off, you know, just my month of September's trading, okay? So can see here, I can see what I made or lost. My win loss percentage for the month of September.

My lost percentage. And then you can see here, which trade was when, which trade was open, which win was a win. And you can see here setups. So I tagged Swing newsletter, so I can see, hey, what do my swing trades are making versus my day trades, right? I can keep a track of that. And I can not even go over here, you can see here, I can see my reports by hourly, weekday, monthly entry price, volume, symbols. So let's say if I wanna see, I dunno buy entry price, right? I click on that and it's gonna load up that I'm seemed to be pretty good with stocks between 2 to $5.

10,000, almost $10,000 worth of profit came this month of September on stocks between 2 and $5, right. And stocks that are between 200 and 500. I actually lost a little bit money. Not that much, but a little bit money.

So right, you're able to see that, right? You can see, hey, what weekday, okay? And now you can see, hey Mondays I'm doing really well. Tuesdays, for some reason I suck, right? And today is also second week, I guess Tuesday, and guess what? Didn't work out. So, it's good to know all these things are good to know. So you can tweak, you can adjust.

So on Tuesdays, I'm not that aggressive anymore, because for some reason I have no idea why, but I'm just not that great on Tuesday. So, guess what? I don't do that, right? And you can see here, I don't know by, let's say hourly, okay. So now you can see, I'm not that great on trades when I take on 10:00 am, right? But I'm really good when I take a trade in the morning at 9:00 am, 9:30 am, or if I take a trade around noon, I'm decent too, right? So again, these are all good statistics for you to know.

So these are just some of the things you can track. And again, they will absolutely help you improve your trading, because these are the kind of data that you can use to make adjustments into your trading. Hope that helps. Have a great one, everybody.

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2021-10-05 15:14

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