This 90-Day Trading Psychology Challenge Made Me Profitable (95% Of Traders Can't Do This...)
Published: 2022-12-12
Status:
Available
|
Analyzed
Published: 2022-12-12
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
Implement a single trading strategy with consistent risk management on a demo account for 90 days.
"this 90 Day Challenge is extremely simple you're going to open up a demo account not a real account you're going to do this through a demo account and what you're going to do is in this demo account you are going to trade this same exact strategy with the same exact risk management plan for 90 full days"
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Switching strategies due to short-term (e.g., one-week) unprofitability is a major issue for traders.
"the biggest problem a lot of Traders have that tend to switch strategies is one they are looking at a strategy on a very short term time scale like a week out they're going oh this strategy didn't make money for a week so now I'm switching to a different strategy"
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Adopt a long-term time horizon (e.g., 90 days) for evaluating trading strategies, rather than short-term periods like a week.
"it should be more of a long term time Horizon something like out of 90 days not out of a week"
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To build discipline, use a separate demo account for a specific 90-day challenge strategy, while allowing for random trading in another account.
"I don't expect you to be able to jump in and only trade this strategy for 90 days with this risk management plan what you're going to do is open a separate demo account just for this Challenge and have another account where you can trade whatever you want to"
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Trading with live money and experiencing losses makes it difficult to adhere to risk management plans, often leading to revenge trading.
"when we're trading with live money especially watching our hard-earned money go up and down especially when it goes down that makes it really difficult for us to stay disciplined to a risk management plan and not try to Revenge trade with a much higher risk on that next trade"
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Lowering trading risk can prevent traders from falling into a fear-based mindset.
"it also the lower your risk will keep you from getting in that mindset of fear"
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High risk in trading, especially after consecutive losses, leads to significant financial damage and emotional distress, causing traders to fear taking further trades.
"the lower your risk will keep you from getting in that mindset of fear a lot of Traders trade based on fear or don't trade based on fear so what happens is you'll see two two losses in a row three losses in a row and you've been risking so much that those three losses have lost you a lot of money"
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The discussed trading strategy can be applied to both trend continuation and counter-trend trades.
"this strategy is something I use for Trend continuation trades meaning going with the trend and also for counter Trend trades meaning going against the trend"
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In an uptrend, prices consistently make higher lows and higher highs.
"Trend continuation what that means is prices are creating new higher lows along with new higher highs"
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The prior resistance level that price has broken is a likely area for a pullback before further upward movement.
"the previous high that was broken is one of the most likely areas for price to pull back to and then push up from"
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A 'one-two-three move' in an uptrend involves a low, a high, a higher low, and then a higher high.
"I want to see price have a low create a High create a higher low and then create a higher high"
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For a trend continuation setup, the broken swing high must have been tested at least twice and be the most recent high in the uptrend.
"this swing High must have been tested twice and it must be the most recent high price broke in my new uptrend"
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In a downtrend, price action is characterized by lower highs and lower lows.
"in the bearish direction we would be looking for quite the opposite we're looking for price to push lower create a low a lower high and then a lower low"
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When a downtrend forms, the previous support level that was broken becomes a key area to watch.
"I'm going to be marking off my previous level of support the price broke in this downtrend"
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A valid support or resistance level for trading strategies should have been tested at least twice.
"this is in fact a level that has been tested more than once so at least twice"
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An 'Optimal Trading Zone' (OTZ) is identified as a level that has been tested multiple times and was recently broken in the prevailing trend.
"I know at least twice we have once we have twice if this is a level that price just broke in my downtrend and a level that's been tested multiple times then I know I'm looking at that level as what I consider an otz which stands for optimal Trading Zone"
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A counter-trend scenario involves price failing to continue a prior move and instead forming a 'one-two-three move' in the opposite direction, signaling a potential trend reversal.
"counter Trend what I will be looking at is price might be doing something like this and as we start to push higher let's say the move from our previous swing low fails and instead we start to push up and we create another one two three move in the upwards Direction signaling a possible uptrend"
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To identify a counter-trend resistance zone, look above the previous swing high and find the next significant resistance level to the left.
"I'm going to do is look above the previous swing I have price and then to the left and the next level of resistance I see is going to be my resistance zone"
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A counter-trend level of resistance must have been tested at least twice historically.
"this also needs to be a level that's been tested at least twice looking left"
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If an uptrend begins, short trades should not be considered at the immediate previous swing high.
"this would be the start of an uptrend if this happens I'm not looking here for any type of possible short trades"
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To identify a counter-trend shorting opportunity, find the next resistance level to the left of the current price and confirm it has been tested multiple times.
"looking left to find my next level of resistance then I'll be looking to see was that a level of this so hard drawing backwards was that a level of resistance that was tested multiple times"
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A resistance zone tested multiple times is an Optimal Trading Zone (OTZ) for potential counter-trend trades to the downside.
"this is my otz or optimal Trading Zone and I'm looking in that zone for counter Trend trades to the downside"
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In a downtrend, a significant downward move after a pullback is not an opportunity for a long trade; the expectation is that the previous swing low will break.
"for a counter Trend trade we might see something like this prices are pushing higher pushing higher and then we get this big move down so what I'm going to be looking for at this point would not be a possible long trade from here this is nothing more than a pullback and when a pullback occurs in a downtrend the likely scenario is that that swing low is going to break"
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For counter-trend buy trades, identify the next support level below the current price and to the left.
"I would be looking below price and to the left to find my next level of support that's where I want to look for possible counter Trend buy trades from"
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A support level tested at least twice is an Optimal Trading Zone (OTZ) for potential counter-trend trades to the upside.
"this also needs to be a level that's been tested twice once twice this would be my otz or optimal Trading Zone at this level is where I would look for possible counter Trend trades to push the market higher"
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The pattern of higher lows and higher highs signifies a bullish trend continuation.
"we have a low a high a higher low a higher high a higher low a higher high a higher low and we've just made what a higher high"
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Identify the most recently broken swing high as a key level for analysis.
"what is the most recent swing high that was broken it's right here"
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When marking a swing high, place the horizontal line on the bodies of the candles of that high.
"almost always put that horizontal line on the bodies of the candles of that most recent swing high"
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Support and resistance are best viewed as zones rather than precise lines.
"trading support and resistance is based on trading around zones and not necessarily perfect lines"
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To find the next resistance level for potential counter-trend trades, look above the current swing high and to the left.
"here's that new swing High we would need to go up and to the left to find the next level of resistance"
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After identifying a resistance level, the next crucial step is to determine if it has been tested multiple times.
"here we have a level of resistance what's the next question I'm going to be asking myself is well are we at a level that's been tested multiple times"
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Distinguishes between an OTZ for trend continuation and an OTZ for counter-trend trading.
"this is our Trend continuation otz and this is just our counter Trend otz"
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A sell entry signal is a double top formation followed by a decisive red candle.
"the entries is a double top with a convincing red candle afterwards"
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For a bearish entry, a double top pattern is required, followed by a strong red candle that is not a doji.
"I need to see a double top so what that's going to look like is one top a double top and at the end of this double top I need to see a convincing red candle and what I mean by that is just a red candle that is not a doji"
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For a bearish entry, a candle's wick can touch or exceed the previous high, but the candle body must not close above the previous swing high.
"I need the wick of a candle to at least touch this the body of a candle can close above or in this excuse me but what cannot happen is a body of a candle closing Above This that would mean Trend continuation to the upside"
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Stop losses are set at 2x the Average True Range (ATR), and targets are set at 1.4 times the stop loss for a 1.4:1 reward-to-risk ratio.
"the stops are 2x the ATR indicator right up here and the targets are 1.4 times our stop loss"
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The conditions for a short trade include a double top with a convincing red candle, stop losses at 2x ATR, and targets at 1.4 times the stop loss.
"the entry itself is a double top with that convincing red candle the stops are 2x the ATR indicator right up here and the targets are 1.4 times our stop loss"
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A bullish entry signal requires a double bottom formation followed by a strong green candle that is not a doji.
"I need to see a double bottom the exact opposite of what we were looking for but this double bottom does in fact need to be followed by a convincing green candle or a green candle that is not a doji"
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For a bullish entry, price should enter the termination zone, with wicks touching or candles inside the zone, but crucially, no candle body should close below the previous low.
"what I need to see is price pull back into this termination Zone and I can see a wick touch the very beginning of that termination Zone I can see a candle inside of it but I cannot see a candle close below it because that Signal's training continuation to the downside"
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Stop losses are determined by multiplying the Average True Range (ATR) by two.
"for stops 2x the ATR what is the ATR right now"
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A 1.4 to 1 reward-to-risk ratio is used for trade targets.
"I'm going to use a 1.4 to 1 reward wrist ratio"
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The day trading version of the strategy is the same as the swing trading version, differing only in the timeframes used.
"the day trading version is literally identical on everything except we're going to be using different time frames"
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For day trading, identify OTZs on the 4-hour chart and look for entries on the 1-hour or 15-minute charts.
"if you want to use this as a day trading strategy is going from the four hour to look for the otzs or the levels of structure and then dropping down to that one hour or even 15 minute charts for possible entries"
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The 90-day challenge aims to break the habit of constantly switching strategies, demonstrating that consistent application of a historically profitable strategy leads to long-term gains.
"the entire purpose of this 90 Day Challenge is to get you from someone that's consistently switching strategies and show you that trading the same strategy over and over as long as it's a strategy that's proven to be profitable in the past does equal profits over a long period of time"
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To enforce discipline, use two demo accounts: one for the specific strategy and another for random trading to satisfy the urge to switch.
"if you decide to use this strategy what you're going to do is open up two separate demo accounts one of them one of those accounts is going to be just this strategy and nothing else the other one you're going to trade randomly whatever you want to you'll trade in the other one anytime you start feeling like switching strategies trade in that other account"
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The 90-day challenge will help traders understand the negative impact of frequently switching trading strategies.
"you're gonna understand why switching strategies is so detrimental to your trading success"
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Completing the 90-day challenge marks the beginning of a profitable trading journey, characterized by discipline, improved psychology, and better management of losses.
"right after this 90 Day Challenge is when I started my true profitable trading Journey where I was able to stay disciplined to a trading strategy my trading psychology skyrocketed and although I still had losses in my trading it was much easier to handle those losses and stick to a specific trading strategy"
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