Special webinar - survival in a zombie apocalypse
Okay, so! Welcome everyone! Thank you for coming to the webinar! It is designed primarily either for those who are new to this game, or for those who may not be completely new to the game, but things are not going well for him. Obviously, I have no experience in destroying hordes of zombies! Even in the context of computer games. But I have plenty of trading experience - I have been trading for fourteen years, at least three years - in a prop trading environment. Let's start our journey through this trading game!
You are on your own. No one can save you
First, don't be under any illusion - you are on your own! And no one will save you. As many of you are probably aware, trading is not an ordinary job. Have you tried to explain to your child what your job is as a trader? I have tried! I started, of course, with what I buy and sell. The child here, of course, asks - what are you buying? And suddenly everything suddenly becomes very complicated, and the number of explanations begins to build up like a snowball. After all, to simplify things, you buy something that you never get from someone you don't know using money that you don't have (leverage). And then you look at the charts to figure out how similar trades have worked in the past, to gauge when to sell what you bought to someone in the future ...
If you are a day trader (like me), then you may have to sit at the monitor for ten hours a day. And maybe you are proud to think that you are your own boss. However, the market would not agree with you. Because it is he who tells you when to trade. And it is he who pays you, and the moment of payment is not determined. Add to all this the randomness factor inherent in trading - you can open a great trade, but lose money on it. Or you can open a nightmarish one, but get a reward for it - by pure chance. All this greatly slows down the learning process.
But it gets worse! Let's take a look at the whole thing of trading and simplify it to the basics that we do every day. This is a business in which emotionlessness (which, by the way, is a trait of psychopaths) is a source of pride! After all, we really strive for it! To turn into a robot devoid of emotions. This is a business that your family, your loved ones, almost never understand. This is a business where if you are lucky enough to figure out the rules, then either the rules or the other players change! How many videos have you seen where someone advises - follow what the big guys are doing? People spend long hours of their time trying to figure it out and try to benefit. And all this in order to eventually turn into a big guy, whose actions will be followed by other traders. And try to make money on them. This is a business in which you regularly experience feelings of pain, dissatisfaction, anxiety, stress. And every step you take ends with disappointment of one kind or another - either the deal had to be kept open longer, or on the contrary, it was worth leaving early, the risks were too high ... There are many other sins. If you look at the emotional sacrifices traders have to make, you might think this is a very unhealthy endeavor. And there is!
And finally, this is a business that the market doesn't care if you prosper or fail. Whether you are alive or dead. The market doesn't care about you! He was here long before you and I came, and will not go anywhere when we leave him. When I work with newbie traders, I always try to instill in them the idea that you need to think of yourself as liquidity providers. After all, roughly speaking, you are them - no more, no less. Calling yourself a liquidity provider is pretty impersonal. But this reflects the essence of the market, because it is also impersonal! Your role is to help others make deals. Think about it, it can help a lot. After all, every time you buy, someone sells to you! And when you think it's time to sell, someone takes your offer and buys from you. Think about what their motives are? Those who have been playing this game for some time are aware that the possibilities of the players here are not at all equal. There are many reasons for this - I'll walk through several.
There are traders who have the ability to move the markets - far greater than ours. They can be institutional traders, they can be central banks - they can really move the market! There are traders with access to inside information that is not available to others. There are traders who can react faster than we do. We know this because of all the high frequency trading hype. And there are traders who have access to much cheaper trading than ours. Mix these four points - it turns out that we pay a lot more money for a much smaller prize, we are less informed and react more slowly. And in this game you need to stand out from the others! Another simple fact - we are trying to make a living by gambling. I know newbie traders don't like this thought. But I always tell them that. Because a high probability is still a probability! We build our careers on our best guesses. Never forget this!
There is no vaccine
Now, if you haven't turned off the webinar after such an introduction (laughs) ... Let's get acquainted with the noodles that they like to hang on us so much. If you are one of those guys who have been trading for more than one year, but will not achieve profit in any way, and at the same time think "if I continue to trade hard, I can handle it" - you might need to think again. I constantly come across advice to keep persisting ... But persistence alone is not enough! I have seen many stubborn traders who have not achieved profitability. If someone does the same thing every day, expecting the result to change - who is it? Well, other than the fucking idiot? One who persists! But persistence alone will not help you achieve what you want. There is only one way to become better in this game - through introspection. What am I good at? What is wrong? What are my weaknesses? What specific actions can I take to become a better trader? These are the questions you need to ask yourself all the time. Perseverance is good, but you need to persevere in a way that contributes to your growth as a trader, you do not need to just repeat the same thing day after day. But many do just that!
The second point that I want to emphasize ... I understand, this is a very controversial topic ... The Law of Attraction does not work. In my opinion. Forget about it! What do I mean by "law of attraction"? You've probably heard someone say more than once: "If you think about money, you will attract money into your life." This is bullshit. Seriously, complete. All these people, confident that if they keep telling themselves that they are rich, they will really get rich ... I worked with traders who hung posters of Lamborghini and villas in Marbella on their monitors. Two years passed - they had an apartment in Peckham and a thirty-pound travel card. I don’t know if any of you are following this path, but if so, I’m sure that whatever you pull in is a fucking disappointment! In this game, money is drawn to those who don't care. Those who are obsessed with money do not achieve anything! This is one of those facts that really works. In most cases. That is why many people manage to trade profitably on demo accounts, but they cannot repeat it on real. Because they don't give a damn, because there is real money at stake! The attachment to money is the reason for the ruin of many traders.
Know the area. And stay away from graveyards
So, if the previous two paragraphs didn't make you self-cut ... Let's finally take a look at the market. The market always revolves around the balance of buyers and sellers. Price and time intersect and generate the well-known excitement ... Let's think for a second about this concept of price and time. The market is one endless TV commercial. It's like on channels with sales like “shop on the couch”. You know, where they try to sell you some kind of garbage around the clock. If you take the trouble to look at how they work ... They fix some price, for example, they say - here, we are selling a diamond for 500 pounds. And then the price drops sharply to an acceptable level. “It costs £ 500, but wait a minute! Now its price is only 25.99! ". And at this moment the clock starts ticking on the screen! And the cheating begins like "time is running out! ..". Everyone rushes to buy. Congratulations to Jenny from Manchester and Kate from fucking Birmingham ... You sit quietly with a beer in front of the TV on Saturday night - and the next moment you are already buying some bullshit.
If you chase the market, you will find yourself in the same boat with these guys! Who are ready to buy anything, if only it was adequately advertised. Or advertised by a worthy person. In trading, you need to know what you are looking for specifically. I understand that my followers have heard this more than once, but I believe that the largest traps in the market are located at pivot points.
Find a weapon. Barricade the windows
So. If you are attacked by zombies, what will be your first concern? Find weapons, barricade the windows and get ready to kick ass. When you start trading, everything should be organized. Here I have nothing special to say, everything is quite simple, but I will still emphasize a few points.
First, trade with a good broker, okay? Please do not try to scalp bunds with a spread of three pips. I also have to deal with this behavior quite often. This is a recipe for disaster! If the broker has constant disconnections - change it already, finally! The broker is your ally, a means to an end. Good execution is a key factor in this game. I constantly hear people complain that at the FOMC exit the broker had a connection cut. There is little pleasant here, right? In this game, you must use the best tools available. And what you use, use effectively
I know not all of you love Twitter, many people think that this is unnecessary noise. I use Twitter a lot! And each trader at the prop firm I worked for had a separate monitor dedicated to Twitter. It is great for gauging market sentiment. Great tool! But it must also be organized. If you only use one column, and all of your 800 subscriptions are actively hungry for your attention, how do you expect to get any useful data from this? Organize your information flows! So that you can see what you want, when you want. I have five columns in TweetDeck - news, traders, analysts, brokers and software. For friends and family, I have a separate column that you can see if you scroll to the right. I did this because when the news comes out, I want to see the news, not the tweet with the cat from the child of my second cousin. I want to see the news, I want to see how the market moves! This requires the correct subscriptions. This is just another tool to keep in order if you are using it for trading. But in this game, your main weapon ... And I know this is an ugly cliché ... But your main weapon is yourself. What are you good at, what are you bad at? Which brings us to the next topic.
The fat men will be eaten first. Keep yourself in shape!
Yes, the fat men will be eaten first! So keep yourself in shape. If you are not working on yourself, someone else is working on yourself. These people will survive. They will defeat you. There are hundreds of people on the webinar now. If all these hundred follow what I say, and I personally mentor everyone ... Even though you will be in the same camp, very likely only five of you will be able to make money. Maybe ten if you think optimistically. It's just a fact that I've seen many, many times. When I worked in a prop firm, I had a realization ... You know, newbie traders whine about any reason, for example, that they do not have enough money for a deposit. Ah, if only I had a trading account of ten thousand, not two! Ah, if only I had eight monitors and not an old laptop! Ah, if only I had a good broker and not this dumb spread betting company! Oh, if only I earned! I would become a legend ...
Let me tell you something. In a prop firm, everyone is given the same training. They are taught to trade the same! Everyone has the same broker, the same software, the same instruments for opening deals. Equal access to the same news feed. Same commissions, same capital, they even get the same risk management! They are all on an equal footing. And all the same - only five to ten percent cope with the work. Which proves that it all comes down in the end to the trader, to the personality, to psychology. No surprises, I'm sure you've heard this more than once! But I realized this all the same there, when I saw that everyone is on equal terms, everyone has the same education and tools, but all the same - someone is not able to achieve what others are striving for.
As traders, you must ask yourself: how am I better than my neighbor? Why are you better than Joe, Robert, Keith, James? Think about it! We are all so friendly here, we gathered for a nice useful webinar, before the start everyone greets, asks how are you doing. But this is not the place to make friends! These are not your friends, these are your rivals! I don’t exaggerate. It all comes down to the fact that the person next to you is your opponent. And if you are not working on yourself, someone else is working on yourself. Someone invests themselves in work, spends hours of their time. Which means they'll take your money in the future.
I'm not going to talk about the trade magazine today, because I've talked about it many, many times. It makes no sense to repeat that this is your strongest ally. An hour with a journal will help you more than five hours with charts. I guarantee it!
But there is one more thing worth adding. Finding the problem is only half the battle! We also need to do something with it. I wish I was paid a penny every time a trader told me about his weaknesses! They are all aware of their weaknesses! But I wish I had two pennies for every time they spit on their weaknesses! I wouldn't have to trade Bunds anymore! I have never seen anything in my life as often as traders who first say “I know where I made a mistake,” and then repeat it ten more times.
I recently even had a fight with my girlfriend about this. She trades bunds, in fact, quite successfully. But the Bund market dried up and she switched to gold trading. She opened a deal on it at a decent level, but it was taken out by the stop. And then the market began to move in the channel - right at the level of its stop. And in less than five minutes she jumped back in! And lost money again. The market moved down and switched back to stagnation. She came in a third time - and again lost money. At the end of the day, she told me: “I realized what I had done! It was overtrading. The first level didn't work, so I shouldn't have gone the next two times. " Fantastic! Someone realized their weak side. What did she do the next day? Exactly the same. Exactly the same. I traded one level three or four times, and closed the day with a drawdown. I asked her if you enter a buy, place a stop loss, and the market takes out your stop and stabilizes ... Why the hell do you decide to enter again? She replied: “Well, I was knocked out, of course, but the market slowed down and stopped, so it looked like it would turn around now. I thought this would be a new low and I should get back into the game. " I asked, “Does the fact that the market went into stagnation right at your stop-loss level does not prove your trading idea was wrong? After all, if it were true, then it wouldn’t have endured. ”
I understand some people like to trade this way. I do not want to say that you cannot do that, that you cannot enter again if you are knocked out by a stop, and here the market shows that it will reverse now. I want to say that you cannot do this if it is a wrong decision, proven by trading results, and you make it over and over again.
Take care of the patrons - and they will take care of you
While in the outbreak of a zombie virus, you need to keep an eye on your ammo. This is probably the most valuable thing you have, besides, of course, the legs that allow you to escape ... In trading, cartridges are your capital. Let's talk about edge for a minute! In the most basic terms. Let's refresh our memory. This is a beginner webinar, so let's take a look at the ingredients of an edge. Three elements!
Winrate is the percentage of your winning trades. Win seven out of ten trades - your win rate is 70%, just like that.
The second point is your payback, the ratio of reward to risk. This is what you risk versus how much you actually make, all averages.
And the last element is trading frequency. How much you trade ... For example, we have two traders, one has a slightly lower mathematical expectation, but a very high frequency of trading, he trades 15 times a day. The other one trades once a day. A trader who trades more often is likely to get ahead simply because he gets more setups. This is not advice to over-trade, this is just a mathematical fact.
Ideally, the higher each of the three elements, the better. And the lower each of them - the higher the likelihood of psychological problems. Most of them are based on the fact that on any of these three points the scores are too low. What if your win rate is low? You can easily lose confidence in yourself. Moreover, a low winrate does not equal a low mathematical expectation! But if, say, you make 40% of your trades, it can be tough for a beginner. He may become obsessed with being right, well, or he may just not like losing 60% of the time. In addition, a low win rate means an increased likelihood of getting a long streak of losing trades. Which, again, can hurt you very much from a psychological point of view. So a low win rate can be a problem.
Low return on investment can also be a problem. It is very popular among beginners to strive to achieve a high winrate, say, 90%. I know traders who have a 95% win rate! Unfortunately, they make £ 2 on a winning trade and lose £ 100 on a losing trade. So a low payback can also harm your psychology, because although you will win in most cases, when you receive a loss, it will be huge. One loss will cancel out many of your profitable trades at once.
And finally, the frequency of trading. Traders by their very nature tend to trade frequently. And the most difficult element to master is patience, the ability to stand on the sidelines. The higher your trade frequency, the easier it is to do this. I don't encourage overtrading, but let's face it - if you have a pattern with positive expectation, it would be great to see twenty such patterns a day! Not just one. Obviously. The lower your trading frequency, the more patience you must have. And if you happen, for example, a couple of losing trades, and your trading frequency is low, then you will need more time to get a profit. Which, again, can be bad for psychology.
So you should probably pay attention to these three pillars and maybe start working on improving one of them. Especially if you can't get a profit. Or you just want to improve your productivity. Because one of them probably sags and brings you problems. Not a bad starting point for thought!
I would also like to briefly discuss the role of luck in this game. I often hear that in the game of trading, only skills are important. Nothing could be further from the truth! The impact of luck in trading is enormous. An interesting point here - if your advantage is small, then luck can play a huge role in your success. This can be intimidating for beginners! But take a coin toss, for example. You expect to come up tails fifty percent of the time, especially if the lineup is big. But if you take an endless sequence of tosses, you can get 20 heads or tails in a row. There is a famous example of this - in 1913, black fell on the roulette wheel in the Monte Carlo casino 26 times in a row. Imagine how many people went broke that day! Surely six or seven people just bet on red endlessly! And so ... This does not happen very often, but it does happen! Winning and losing trades can go in any order.
And finally - keep calm in this game! To keep from going crazy (literally), take regular breaks, okay? I know very well what stress is capable of. Because I have a full head of gray hair and a pressure of 140 to 90, and I just turned 35 (laughs). Twelve hours a day behind the market - sometimes it drives you crazy! Take exercise breaks throughout the day. It's incredible what a thirty minute run can do during your lunch break! This will release any accumulated stress and energy. Most of the guys in the prop firm go outside for lunch, do exercises, recharge, regenerate. Take breaks from trading, whatever the cost! Moreover, regular breaks. Do not forget about it when your ass gets kicked. Because from time to time it happens that whatever you do turns to shit and you can't do anything about it. Just look back and make sure you are doing the right thing and staying on track. And continue driving. During periods of loss, I like to take breaks, take a few days off - I think this is very important for maintaining a healthy state of mind and preventing the mistakes that people make in such situations, you know how it happens, they overestimate the risks, get hung up on short-term results, forget that this is a long-term game ...
And analyze your performance! If you can only take one thought out of the entire webinar, let it be the thought of promising yourself every day to write something that will improve your trading. It can be something as simple as “I woke up at 7:30 and missed the euro trade, tomorrow I will get up at 7:00” (laughs). Keep it simple! But pick something that you did during the day and make it a goal for yourself to do it better from now on. Maybe it looks like I'm contradicting my own words about the "recent effect" ... I don't advise you to make big changes to your plan right now. But usually, at least one of the things you do during the day, you can do better. And at the very least, it's worth finding what it is, writing it out, and seeing if you can improve it. Especially if it's something repetitive, if you regularly record the same thing, do something already! Remember I talked about my girlfriend? Identifies his mistakes on day 1, repeats them on day 2. Guess what happened on day 3? I didn't let her trade! Since then, she has not traded.
That's all I wanted to tell you. I think part of this webinar turned out to be quite depressing, because some topics for beginners may seem too negative. But you have to realize that this is an incredibly, incredibly difficult game! Once again, thanks a lot for coming! I have long wanted to host this webinar, to try to bring a little reality to this game. I would be happy if someone told me about