Hey hey: what's up my friends, so in today's episode right we will be discussing how you can learn from your mistakes and shortcut your trading success, because here's the thing in trading right: it is not as black and white as it might appear to be right. For example, you can make money right on poor trading decisions and you can lose money on right trading decisions. So now comes the question to you know what is right and what is wrong because, clearly right, you can make money doing the wrong things and you can lose money doing the right things so now. How do i know what's right and wrong? Okay, so this is why it's important right to understand right what are trading mistakes right, that you really want to avoid making right, because in the grand scheme of things right, these are the ones that are actually holding you back, although they might not be too uh.

Prominent right in the short term, okay, so to do this right. First and foremost, you must have a trading journal. I know most of you are thinking, ah right now, trading journal. Ah, that's the boring stuff! I want strategies, i want the tactics.

I want the patents. Here's the thing right, many traders out there - they just focus on the strategies, patterns, tactics right, but the minority right, the traders who are consistently profitable. They are looking in the other direction, their trading journal. How can they improve on their trading results? So you must have a trading journal.

If you are serious in this business, you must have a way to record down your your performance. Okay and the trading journal will help you with it so in the trading journal. If you are clueless about it right here are a few basic things that you need to have it down right number one: the type of trading setup that you're taking are you trading a breakout? Are you trading a counter trend, trade, a trend trading trade? Whatever you need to filter down and write down, what is the type of trading setup that your trade right, then you just take? What is the category of the setup number two you need to. You know write down the stuff, like you know your entries, your exit, your stop loss right, it's all the basic matrix that you should have then number three right.

You also want to put down right your your uh overall profit or loss on the trade, and i like to write it down in terms of r, so r, you can just simply treat it as your risk to reward on the trade. So, for example, if you risk five dollars and you make twenty dollars, that's a risk to reward of. You know one to four right. So in terms of your r, multiple column, you write down four r.

If you hit a stop loss right, then it's a loss of one r, simple stuff: okay, so that's pretty much right what your trading journal should entail at a bare minimum and if you want to take things uh forward right, you can. You know screenshot your charts as well, when you took on the trade right your exits when you exit the trade screenshot, those charts, those are also very important, stuff. Okay, so this is the rough idea to what your trading journal should entail. So once you have it right, then, then, what now? Okay! So once you have your trading journal and i hope right, you are consistently recording down your trades.

You know 50. 100. 200. Whenever you put on a trade, put it down your trading journal and once you have a sample size of trades right, this is where the magic begins and trust me when you are at this point right, you're already ahead of ninety percent of traders out there, because They don't even record down their trades, they don't even know what a trading journal is.

Okay, so once you have, let's say a sample size of 100 trades when you trade, 100 breakout trades, you have 100 lines in your trading journal. This is where you know things happen right, so the first thing you want to do right in your trading journal is to identify right. Where did your largest loser come from? Because if you think about this right in trading, your trade can only end up in one of few ways: number one: it's a large winner number two, it's a small winner, number three is break even number. Four.

It's a small loss and number five is a big loss. So the first thing that we want to tackle is your large losses, because if you can contain your large losses, you will be that much closer to becoming a profitable trader. So the first thing that we're gon na do when we analyze the journal is ask yourself where you know: uh identify right. If you have any large losses, losses which are more than one hour and then what you want to do is ask yourself: how did it happen right, why it happened and how we can avoid it? Okay, so let's say you look at your trading journal and you realize that there are certain trades.

You know you have a loss of 4r 5r meaning you know four times what you plan to risk then ask yourself, you know. Why did this happen? Is it because you're trading in the market, let's say a stock market that is low liquid stocks and by the time you exit your trade right? It has sleep right badly against you suffering bad sleepage. If that's the case, then what you can do is, you know, avoid trading this type of low liquid stocks or maybe let's say you had a loss, a large loss, because you didn't follow your rules, you, you feel uncomfortable, you know taking the losses. So that's why you hold on to it longer and that's how your laws snowball into a large loss.

If that's the case, then what you want to do is to you know, take preventive measures right so that it doesn't happen again and, and one way to do it right is uh. You know make sure that the pain of breaking your rules is greater than the pain of following your trading plan. So, for example, let's say if you don't follow your rules, so you make a promise to yourself that you know you donate a thousand dollars to your favorite charity. So clearly right.

The pain of you know. Maybe donating to charity is greater than the pain of taking that loss. You know something along those lines: okay, basically doing something right where the pain of doing it is greater than taking that loss that you had so i'm just giving charity as an example right, maybe you're, a very charitable person that doesn't work for you, then maybe you Know run 10 kilometers around the park, something like that right make sure that the pain of breaking your rules is greater right than following the rules itself. Okay, so this is an example right, so how you can actually identify your larger sources right and you know prevent it from happening again.

The second thing you want to do is to identify patterns right. That leads to your losses right, and you know avoid it right. So, for example, let's say you, trade breakouts, you have 100 breakout trades, they recorded and you find that there are certain patterns right there. Whenever you trade, breakout, those breakout trades tend to fail.

Maybe because you know you realize that you were trading against a higher timeframe trend. That's why those breakout trades has a low probability of working out. If that's the case right, then you want to avoid trading breakouts right when it's against the higher timeframe trend. Again, all this, you will only know right when you review through your journal right when you record it down right and look through your charts and see what are the patterns right that occurred that lead to your losses.

So all this only you can answer, i'm just giving you examples of what you might find. Okay and finally, finally, the last question you want to ask yourself: is you know to identify your small winners, okay and why it occurred. So there's nothing wrong with small winners. Right, for example, if you follow your plan right and it's a small winner, that's fine, maybe you're, using a trailing stop-loss technique, market retrace and hit your trailing loss.

You end up with a small winner or break even trade. That's fine! Where it's a problem right is, if you were actually having a small winner because of breaking your rules, because your emotions came into play right, it caused you to deviate your rules and that's how you end up with a small winner, okay. So this is where again right, you want to. You know, ask yourself: why did you break the rules right? Why did you not follow it and again to do something right to make sure that you know the pain of not following your rules? Right is greater than following your rules yourself right, so these are the few things right that you want to do: to identify your mistakes right and shortcut your trading success.

So let's do a quick recap right. So first thing you want to do is to set up your trading journal. This is the only way right to get started in the right direction. Second thing you want to do is identify your largest losses out there and ask yourself: you know why it happened and how you can prevent it.

Third thing is to identify patterns right that lead to your losers right. What are some common patterns that usually lead to your losers right and you know avoid it and finally, the last thing is identify your small winners and ask yourself: you know: why did it occur? Is it because you're following your rules or is it because your emotions came into play and then you know fix that issue as well? So with that said, i have come to the end of today's episode and i will talk to you soon. You.