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This video also contains no commercial value
of any kind, it does not offer any EDGE or
otherwise. It contains no educational nor teaching
value with any reliability nor validity.
Simply put, just watch it for entertainment
purpose. No claim is made if it will ever
leave any good impression of any kind
on any wannabe trader at any level.
Just enjoy, K?
In case, you are curious wanting to know,
how could the trader be so confident
that the next bar price will be heading
lower and lower, instead of spiking up,
like it would happen so very often and
then take him out?
Well, there are supporting statistical values
generated; showing if the next bar is
most likely, more likely, less likely or
very limited chance that the denoted
bar will be about the same, higher or lower
ce cetera....
In the video, you can see the poor trader
dug in, only with a bunch of statistical
values backing his decision.
Poor guy....! But enjoy, traders.
The video was captured on Monday, June 27, 2017 at
the precise time as stamped at the bottom of
the running video, if you were Thomas wishing
more precise details, K?
While saying "put only $5K in your account, no more" sounds like sage advice, the reality is that with such a small account, a trader's risk of ruin is much higher. What happens a lot is that a trader will start with a small amount, lose some, panic and start making bigger trades to make up for it, and before he knows it, that initial capital is gone.
1. Get sufficient trading capital to be able to manage risk effectively and make it worth his / her while.
One of the more effective ways to accumulate sufficient capital is to deposit money monthly into a brokerage and take a swing-trading or longer-term approach to trading by using non-leveraged ETFs or stocks. The best part of this is that it can instil disciple and patience if you are willing to learn. If you can't manage to save up sufficient money then it shows that you really don't have money you can afford to lose. If you lose money on the account through your trading, then it gives you a chance to review your mistakes and try and address them or perhaps even realise that trading is not for you.
2. Understand your risk profile and how extreme swings in your equity can destabilise you emotionally.
Most people completely overestimate the amount of risk they can tolerate. When your account balance is subject to massive swings, then the emotions you feel get magnified. If a position goes against me, but I only risk 0.5% on the trade it is not very destabilising and the position could potentially still be exited for a profit (market willing of course). However, if I risk 10% or 20% on that trade, then in all likelihood I will exit the trade exactly at the "uncle point", i.e. the point at which I give up on the trade and not the point where I get proven wrong. The same works for winning trades - if your account is up 100% for a month, it can be just as destabilising but in this case it would be due to ego.
Expectancy and edges are often misinterpreted by traders. An edge is a sum of quite a few variables and edges can often hide risk. For instance consider a trader who sells puts in a bull market - he will do well until he blows up in a very short amount of time when a major selloff occurs. Understanding how the variables making up expectancy affect your edge are also very important. Aiming for larger winners can decrease the win %. Increasing stop size will increase win %. Try and find ways in which you can achieve a balance that leads to positive expectancy and then once trading, monitor these variables and adjust where needed.
This is the best piece of advice you're ever going to get. I think trading psychology materials have their place, but you shouldn't be touching these books/videos, let alone making a trade, until you have worked out strategies with verified edge. I've seen a lot of traders blame bad habits as the cause of their trading failures in cases where they either a) didn't have a clear strategy or b) couldn't prove that their strategy actually worked in the long term. Having confidence in yourself is useless if you don't have confidence in your systems. My 2c...
Thank you for your input. This brings up the question how does one verify if he had an edge, and sample size etc. I realize answers are almost endless to this question. Thank you again for your input.