Trading Psychology & Live Day Trading Crude Oil Futures

– Psychology of a Professional Trader

o Discipline cycle workshop in the advanced course, section 4 on emotions

o Whats the difference between a good trader and an excellent trader?

o Whats the difference between a profitable trader and a losing trader?

 The differences are the EMOTIONS that can either help or hurt a trader’s decisions.

o A professional trader knows that each trade involves risk, and that winners will come with losers, its how we react to those losing trades that makes the difference.

o Professional traders get into the ‘zone’ where they aren’t thinking, they are reacting

 Athletes get into the zone
 Musicians get into the zone

o Professional traders get into their ‘zone’ by removing the fear of losses
o They see every trade as a decision, and each trade result is the byproduct of that decision
o Professional traders take FULL responsibility for their trading actions

 If they win, they made the call

 If they lose, they made the call

 It wasn’t the markets fault

 It wasn’t the market makers out to get you

 It was YOUR/MY decision, and I need to live with it.

o Professional traders understand the value of trading WITH the market, not against it.

o Here’s a good example of what NOT to do:

 New trader makes money on day 1

 New trader loves trading!

 New trader loses money day 2

 New trader thinks the market did something different

 New trader finds more tools, indictors, more rules

 New trader goes back with more info

 New trader makes money on day 3

 New trader loves trading

 New trader gets overconfident

 New trader loses money

 New trader tries to find another indicator, another tool, another rule

 “IT’S THE MARKET’S FAULT, NOT MINE!!”

 New trader reads books, webinars, pays guru’s and the new trader still cant find the perfect tool

 New trader gets frustrated

 Market is out to get the new trader!!!!

o Most new traders are focused on remove the FEAR in their trading, they should be focused on increasing their confidence!

 Confidence increases when I am

• Familiar

• When I know what’s going on

• When I understand the situation

• When I’ve done something with consistency

• When I have seen it before

 With confidence at my back, the next time a trade comes up, I have all the confidence I need to enter the trade quickly.

 Avoids chasing, avoids waiting too long to enter the market

o Good example:

 Professional trader sees lots of patterns every day on his/her charts

 Some patters are high risk, some are low risk

 Professional traders know exactly what the HIGH % trades look like, so they are confident ready, willing, and able to enter those trades the moment they trigger

 Professional traders also know to confidently avoid trades that don’t fit their rules, and every time you avoid a losing trade specifically b/c you followed your rules will give you more confidence to enter the trades when they trigger.

o Fast Track Method is intended

 The goal of the FT Method is

• Increase confidence in your entries
• Teach patience to wait
• Show you how to live through a stop loss
• 1:1 risk/reward ratio is the best you can have!
• Set it and forget, no trade management

o What’s the most important thing you can do to help your trading psychology?

 Listen to the market, don’t just watch

– When will a trader use larger positions?

o Larger trade positions = larger emotions to worry about
o Many traders have a difficult time growing their account because of that fear of losing money
o Growing slowly is the best way to do this
o Start with a demo

 Add 1 contract

 Add another contract every time you earn $1,000usd

 Every time you add size you also add risk per trade, but as long as the Risk Reward Ratio is the same you will be fine.

 As you add more contracts to your trades, add them to the closest targets first, the 2nd and 3rd targets will use larger size once you feel comfortable with the new larger trading size.

o For example:

 Week 1-2 Practice
 Weeks 3-4 1 contract

• 1 target

 Weeks 5-6 add another contract

• 2 targets

 Weeks 7-8 add the third target
 Weeks 9-10

• Add another contract to our first target

 Weeks 11-12

• Add that 2nd contract to the 2nd target

• Pushing your contracts out

• Add another contract to the first target

– Review the last crude trade, short

Fast Track Question:

– Im using a 10tick stop and 10tick target

– My trade goes +9 ticks and then momentum is pointing down, and speed is slowing

– Can I take my profit earlier?

o Fast Track = NO!

o If you worry about taking profit, you are missing the point

o The goal is to read the tape, watch the volume, and learn what happens in this situation

 You may see the target get filled

 You may see your stop get filled

o Lets say you get stopped out!!

 I missed my target by 1 tick

 I lost 10 ticks because I didn’t get the target

 I learned that I should take profit when the market is 1 tick away from my target and I see momentum curl

 In the first 2 weeks you need to learn what the market looks and feels like, not how to make money

 After the first two weeks, then you can feel confident that you have SEEN IT and DONE IT twice.

 Use that experience to manage your trades.